Ross Stores (ROST) 21 May 202020 Q1 Earnings call transcript

Company Profile

Participants

Barbara Rentler	Chief Executive Officer
Travis Marquette	Group Senior Vice President & Chief Financial Officer
Michael Hartshorn	Group President & Chief Operating Officer
Lorraine Hutchinson	Bank of America
Mark Altschwager	Baird
Kate Fitzsimons	RBC Capital Markets
Tracy Kogan	Citigroup
Kimberly Greenberger	Morgan Stanley
Adrienne Yih	Barclays
Mike Baker	Nomura
Matthew Boss	JPMorgan
Charles Grom	Gordon Haskett
Jay Sole	UBS
Bob Drbul	Guggenheim
Ike Boruchow	Wells Fargo
Laura Champine	Loop Capital
Alexandra Walvis	Goldman Sachs
Michael Binetti	Credit Suisse
Marni Shapiro	Retail Tracker
Dana Telsey	Telsey Advisory Group
John Kernan	Cowen
Jamie Merriman	Bernstein

Call transcript

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Operator

Good afternoon, and welcome to the Ross Stores First Quarter Fiscal Year 2020 Earnings Release Conference Call. The call will begin with prepared comments by management, followed by a question-and-answer session. [Operator Instructions]

Before we get started, on behalf of Ross Stores, I would like to note that the comments made on this call may contain forward-looking statements, regarding expectations about future operations and financial results, including store openings and reopenings and other matters that are based on the on the company's current forecast of aspects of its future business. These forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those statements and from historical performance or current expectations.

is risk in included Form the fiscal Form related release today's XX-K about the XXXX included with and company's X-K information factors in is press and SEC. Additional file on fiscal XXXX

Now, Barbara Chief I'd Executive to Rentler, like the over turn to call Officer.

Barbara Rentler

Good afternoon.

any operations, our President current the quarter Connie Relations. our Senior on of our followed to and second Vice status our questions Group plans, details Chief are today we'll Kao, Officer; Investor to by and Operating call review Financial company's Michael today financial me Chief you update first including begin Travis and our may Afterwards, store Vice the entering happy an quarter. President We’ll President, of have. reopening Joining Hartshorn, Officer; on position call and with of Marquette, Group a be performance respond the

center through most prevent closed spread and a to and were Further, our with were from reminder, buying help remotely. work to continuing locations end corporate offices XX distribution also March the the quarter coronavirus. closed store all associates of As ongoing the

on and temporarily operations, majority the decision began phased April effective of on necessary market-by-market XX, the of recently, well May a to stores some associates basis. center process With we difficult a across closure our but made we the business as retail our of store as distribution employees furlough other X. reopening More

the expected officials be advisors state local stores coming and followed the since, have XXX a of federal, remaining as to This as government. well from stores review over guidance with and careful reopened weeks. current Approximately health reopened

only and we the it will well-being health priority to of do will our always customers. associates stores and safe is Our when so. be And reopen top

remains forward. pandemic and materially, we change as of plans dynamic cautiously Further, the move these could the very state

we the associates, operations, a goal restart serve As variety we our and with keeping measures we customers safe. of communities the implementing are of

These on with and cleaning sanitation based practices. and and stores measures additional or of providing health CDC distancing workspaces, guidelines will equipment physical associates protective other include personal implementing

ramping We weeks. will network reopening distribution also center be in up the our and coming

we addition, coming in corporate the to offices buying and In expect months. our reopen

stores, all we safety of additional these As place health with and putting measures are in areas our across facilities.

to now our financials. Turning

noted quarterly has As than today's had press quarter end business, XX and COVID-XX results unprecedented March more which years. through the the in quarter led pandemic from release, loss our the in closure the first on of our to all the our first impact, stores XXth, of of reflect

$X.X billion, Total sales the for year. the in quarter billion were down $X.X from prior

stores period, that the than less for sales the Given metric quarter. open not XX-week the weeks seven is of meaningful store comparable for were

versus $X.XX share $X.XX For the XX May weeks earnings we loss for X, incurred a period XXXX, same year. per last of share the of per ended

The net $XXX income of million versus last loss for the period net was $XXX year. million

charge relating the operating the that In to portion now original addition non-cash our impact includes inventory XXth, loss inventory to due from negative the below stores the beginning also a to valuation we March beginning the of of closure revenue all lack our sell to cost. stores one-time of significant expect

to inventories compared prior Average inventories, of last were last XX% this at year charge ended down in-store consolidated X% net quarter, over the X% packaway the up versus period to As total total, the year. valuation the quarter of XX%. end were we total year's at the same levels with compared

locations seven and stores. We dd’s first Turning and the to Ross opened store DISCOUNTS XX ended quarter total the period with in growth. X,XXX

for a current stores stores total about we year. will to fall stores patterns and this shopping open the not open of XX the in the uncertainty significant new expect as Given full consumer quarter for reopen, new and now of behavior, XX stores

Travis Marquette on quarter. our provide position financial the further second results details Now on first quarter our will entering and color

Travis Marquette

Thank Barbara. you,

net we loss million as reflects mentioned from closures, the margin significant store reported $X.XX $XXX one-time the or earlier, Operating charge a Barbara the share. $X.XX of impact As revenue inventory the per per $XXX of for decline period a evaluation of first as million our or share quarter. well non-cash for

items quarter small therefore, of As coming quarter, months. is method that most inventory cost. that when of value we expect realizable the for be existing one-time inventory. sold only spring below valuation charge The in total are reflects takes cost we estimate or in believe value unless recognized accounting first which our a the the reminder, necessary the on the are inventory provides will a net portion lower the markdowns markdown reflects cost first of inventory, to the This we to markdowns, sell sell-through below

on We that occur important markdowns activity impact the we sell-through is quarter. of It quarter. that majority to ultimate the move expect the second the of depend of these markdown vast pace will through in as the will note

Now current and financial let's our discuss balance position sheet.

pandemic, the in response flexibility. created our took financial in release, to noted by disruption As liquidity quickly decisive the COVID-XX and we economic severe actions press to increase our

new drawing included our credit facility. under bond undrawn $XXX and public $X million a facility, offering unsecured existing obtaining down $XXX revolving These million senior credit billion completing a revolving

our stock we As on repurchase XX. suspended program March previously announced,

a total price about we million. X.X for stock $XXX so, purchase common million of repurchased doing of shares Before

no have repurchase for remainder the year. the to plans We shares of

dividend also we the of quarterly payments. announced addition, In today our suspension

liquidity. by non-business aggressively the our also to are plans costs cutting reducing inventory rightsizing throughout receipt and operating minimizing enhance expenditures merchandise company expenses, capital and critical We further our

liquidity, approximately now projected guidance quarter in for $XXX with the from $XXX revolver. initial ended in expenditures We an $XXX includes position a cash of and million, strong over the million $X which financial Capital unrestricted billion billion are to about million. of down our new $X.X be ending year this balance

over Barbara the groups so stages do coming resuming of of in early stores, by safe we earlier, are becomes it weeks. mentioned As to operations as the reopening

this store traffic. quickly on have consumer However, visibility recover the on impact have and we no how will will demand

these time. providing not we quarter earnings outlook annual guidance second or are updated sales and an Given at fiscal XXXX unknowns, this

to back comments. closing for Now the Barbara I'll call turn

Barbara Rentler

to you, reiterate the We and the to by believe we important and is to extraordinary us. associates COVID-XX, how on will the conservative our prudent could Considering a managing crisis created the global to Thank health always safety health approach utmost want given consumers, our customers impact be wellbeing Travis. of uncertainty that of this prices it business. take

have ahead, as throughout Travis to foundation. bench financial we a proven of very business. a leaders and emphasize And I the strong Looking deep experienced want that noted,

ever than, ever. in acquire more to significant opportunities marketplace best some We also see the brands of the –

the our we in believe consumers challenging makes well will these both to remain navigate off-price through focused sector convenience, confidence positioned in delivering retailers and and to times. continue us successfully ability this term, value all favor Longer on

you At any this like open the have. point, we'd to questions may respond and up to call

Operator

Bank first Lorraine Hutchinson from America. comes [Operator question Instructions] from Your of

Lorraine Hutchinson

Thanks. on some Good early those details it's they're stores afternoon. that if have I for how the know could open, but just been openings, store provide days wondering I performance you was trending?

Michael Hartshorn

Michael been it's Hartshorn. for less a than week. reopened Lorraine, Hi, us have Stores

this point. provide we at commentary wouldn't So

of the post behaviors, environment competitive reopening, in of as opening, factors Beyond openings number backside of commerce customer his talked among social demand will changes others. on a there's the about consumer impact including that Travis to and the the certainly impact economy though, commentary, initial distancing

predict the we the can't for this of going impact believe, point, after do the stores on what's We be the at we to reopen the though, a So consumer year. demand of happen there'll throughout remainder negative year. remainder

Operator

comes Your Altschwager Mark from Baird. next from question

Mark Altschwager

seasonally inventory. I Obviously, question. write-down take of on will then, room Thank hoping inventory? about my how taking just was quarter. any a long through for you're Thanks in today? with in it and do took afternoon. make you the fresh And you goods think for you. Good to the more clear bit could of aggressive being talk the process here realigning marketplace the you some How purchases inappropriate context the

Travis Marquette

Yes.

In were the closure given amount significant goods. and we have were the stores fact aged a abrupt of trends do with inventories misaligned. leading stores, decline our inventory, of for -- the terms immediately again, of substantial months, the again, broad-based Again, the preceding seasonal stores and two closed that

that assessed portion risk markdowns have will reviewed first the of be in position the So and quarter, that recorded below markdown inventory believe in we and light, our that we had we cost. the

In those, again, through terms to of really know ultimately it how what will the take sell-through and have We move how it a quickly consumer long stores. return don't We depends. will don't to our the ball. crystal

ultimately, factors will on there's that of And of that. impact I rate influence will as As the we depend the Michael move mentioned, is as of through sell-through markdowns what the economic that a quarter. mentioned, lot

Barbara Rentler

were the liquidate DCs we're obviously, our and fresh DCs. goods the trying also in process opening the of to in goods in and inventory stores, terms stores outside in in that the And the that just stores now first are the and

first to need we work that. So through

not have actively we sell-throughs can customer merchants market their very They've say, will place. understand what in little go been think and the it The understand a of been we close market, sales what like, bit the and a after very about of back and can the into with to look vendors staying wants. lens what what more would is we we I need surgical buying we

Mark Altschwager

the Thanks for color.

Operator

the next line RBC Fitzsimons comes Capital from of from Your Kate question Markets.

Kate Fitzsimons

you of category from for guess, you apparel. home more We've question, outperforming, taking the heard Thank opportunities in extension it I is evaluating are when the of other about to how the Yes. you maybe side are buy, finally much place and willing peers very market Hi. my back go question. than some on fashion to this? – last an

to industry you of be Thank So out you will gate? be just much. maybe very could curious how dictating buying the trends how

Barbara Rentler

opportunity. Category Sure.

sell-through and category, would time, have our overall of it's for, still of one a nesting home buying as what especially First, to kind normally might The people long for apparel forward go as they customer home are see, be I that home a voting would has buy. good period or think, whether perhaps expect things home. had is a we that trend business the we inventory,

there, will anticipating for there. customer. be bargains what home. and great But, lot are with that, and see We branded on opportunities out lot the goods of really apparel closeouts it We're a out a both in depend there'll in of the that

the So to around want I one other. versus sides don't business saying, put its

may deals -- a go think dictate the from. of where in lot environment, would come this sales the I

Operator

Your from next Lejuez Paul Citigroup. question comes from

Tracy Kogan

if talk Kogan about you you to quickly less stores? packing as how Paul. packaway that, if about It's things normally than flow I could into could in Thanks. might Thanks. And maybe environment? this you guys for corollary thinking Tracy in a you're time was for filling away wondering how you would? And be things

Travis Marquette

matter a flow the very Tracy, a two -- the and on stores. speed packaway we week a through or the matter speed, the On days quickly, can of into inventory of DC from

Barbara Rentler

just next not that I'm in until buying question? thought just mean around could I terms it And the packaway than year. release of March release of might process that packaway, packaway assuming that Is really your earlier you

Tracy Kogan

Exactly.

Barbara Rentler

the would if it's be some product, I think to what spring truly classifications, right? product. it it product some appropriate sooner some would And on So hold that until there'll in classifications the really products, depends of goods you later. have season, in be is, than spring

total. it varies there whole product the and the the based So there's the of a But lot in thing. off classification of timing, gender, out

So which say some flow sooner. of a of could choices, little would a I lot there's probably

Tracy Kogan

Great. you. Thank

Operator

from Your from Morgan next Kimberly Greenberger question Stanley. comes

Kimberly Greenberger

from weeks packaway have of hand? it normal so excluded you or many at I typically sort inventory to how you eight inventory, Thank understand much. Great. weeks XX on your you of Is volume? weeks wanted would sales if

reopening, position this a you And distribution at are reopening secondarily, actively are that also your all flow of to to then you've are as stores got opening? stores of time? Thanks. them be now you've to got able in some And your centers inventory

Michael Hartshorn

all have centers the we in of ramping our ramp distribution Carolinas centers, distribution and and are and includes in to the on that Carlisle, -- Kimberly, teams preparing up Pennsylvania. California, production, also management

started In prepared production the already they to start as start DCS. and backfilling to ready Carolina, South we've we're need. stores So

Travis Marquette

just if again, balance quantify we've specifically think look only, you trying are it I terms the be to focus don't our on than faster of in-store quite would significantly metric quick. In sheet. at the on the past, just total turns, inventory you're in-store turns if inventory but in that

Kimberly Greenberger

unusual February I’m wondering, have you pre-COVID business or any month first the on week February how anyway moving the understand business and was trending this just March, great. And -- either very lastly, to of of for month the just very, before comments directionally time. the we how into Okay, went if was of

Travis Marquette

Sure.

plan as above we was February, until just prior talked As early on about, trends sales deceleration think, a closed very about to sales and in talked we about we previously, were stores we rapid there when, good March up March felt our XXth. I when

Kimberly Greenberger

is that us would lastly, for inventory be land? expect any would like you where way And Okay. about to – Great. quarter you and second would inventory end able work you is aged quarter? feel moved And inventory there through your to aged to through expectation think today, do you with second are you you the the that cleared by will of have that it the through sitting

Michael Hartshorn

chase in second and to the going Kimberly, inventory, expenses, of sales, very, operate pace, quarter. position is move that the on ourselves And business, we're to our both the a it going put can expenses. so goal business capital, strength very through leverage in to we cautiously, we're

be end down the inventory So at second we to the expect quarter. of would

Kimberly Greenberger

Michael. Thanks, Okay.

Operator

Instructions] from Barclays. question comes Adrienne next [Operator Yih from Your

Adrienne Yih

if throughput? size? if Yes. comparisons And what see curious, are how to Travis, you recovery JCPenney? talk layering quickly what's the XXXX happening the opportunity talk to was are basket about can you bankruptcies, can stores, us Good metering opening potential you're post or hours? payroll afternoon. then XXXX Barbara, then the period? for wondering about all How XXXX, you to Michael you just at And and when in from I the Thank you. And you

Michael Hartshorn

out been the regulations Sure. Obviously, We in on wouldn’t week. basket comment opened of stores local the how side, a to the meter again stores. have and on there's only

metering that's those occupancy on predetermined metering at to security require below what below cases, most make keep front safe. based store and customers the we're limits, even in of the each we than have sure restrictions – We associates

make sure to we're distances payroll We as people through the and that trying safe have to appropriate. keeping included registers move

Barbara Rentler

worse. to this retail think expecting to terms Obviously, the the crisis We're is then slower. different. a comparison much current of XXXX, And in be I much recovery environment is

have to and During the stores. We place, health close in shelter distancing. financial have to didn't safety didn't crisis, we mandates, through navigate social

will recovery different, we think be a think on very is this it back. So and we our way slow

of of about market there's to for term, way for that business. terms been bankruptcies, moderate bankruptcies, an think the is and lot In particularly us share, portion long it the a think I there's of Penney's the in opportunity

Adrienne Yih

Well, thank very you stay much. and Best luck safe. of

Barbara Rentler

you. Thank

Operator

Mike from from Baker comes question Nomura. next Your

Mike Baker

into do you. of thank costs might including maybe things discuss how you. goods need change, your safety will versus your sold? you. mix and operate terms up costs, of of to stores cost precautions? Could costs Thank other Thank or the that And Excuse you me, now to variable ramp that in to fall cleanliness need some with you

Travis Marquette

Yes. Sure.

costs. operating G&A. cost think The goods about both majority which you vast include our those as of would If total as are variable well of cost

line, you variable. about and If out roughly merchandise one-third costs, pull margin the just at the look fixed remaining and it's two-thirds

additional definitely as that cost distancing, costs and of will protective terms be there into cleaning to social In well be will about, be around working personal talked additional the as particularly there, significant that will managing costs equipment. tasks, as business, Michael we've add for alluded we

elevated I we'll would will will forward. added we those we'll savings We've So and we find those other try as cost – But carry be taken expect many bit to as identify be to of move related forward. factors. a to will do those aggressively number of business actions the already, a as costs to work can And offsets. to

Michael Hartshorn

And we I the and are health necessary, safety prioritize that add associates those investments would just absolutely and safety for customers. as

place protocols new foreseeable the expect the be would in for to we So future.

Mike Baker

certainly color. I that. the doubt. Thanks No Yeah. appreciate for

Operator

from Boss comes Matthew from next Your JPMorgan. question

Matthew Boss

year, assumption pressure, back confidence maybe second pre-pandemic? gross And headwind what's think over magnitude event, year. a up the Is margin to merchandise a On to that frame margins, of the your the were to just or we as half time back any about the reasonable XXXX margin Thanks. about that XXXX get is think returning merchandise this we as of where importantly, size or what quarter way to in to cadence Great. of the relative levels?

Michael Hartshorn

it's Michael. Hey,

a visibility just give answer there's enough back on point. On you to getting pre-pandemic, at that this the -- not to good

second days, be based in be it's The these going stores. – going is as early to margin quarter sell-through reopen we to the the on

how So, more the that have and report plays QX. end out see at we'll to of

Matthew Boss

Best luck. Great. of

Operator

comes from from next Grom Charles question Your Haskett. Gordon

Charles Grom

your time inventory. own to starting Hi. of Thanks. remarks. Good being in during about the afternoon. and to channel There's that lot a vendors there – best one talk a in there's about spoke as pack long some also away being out the their opportunities But buying prepared of Barbara talk

for if do it's So, I more changes of phenomenon? this I'm curious, set just think guess, a or you near-term opportunity the you,

Barbara Rentler

me and with in merchandise of there it's market, very start Let is the lot broad-based. a

good, have the In do aren’t terms think to they're that, saying of vendors that position position be the the cash – the wouldn't that majority do the pack of it. way going to vendors in really in they I really to

do maybe it. the market I take But people. I vendors in think large total, can if you the that not of majority think, the

Operator

from comes question next from Your UBS. Sole Jay

Jay Sole

Thanks very been very got question. stores for I long. much. Great. The a open haven't

in as the the off-price if shopping they'll may to just it's comfortable Thank they your world how figure And how when going reopen, get stores trying is and the on pandemic research of traffic that read social over distancing. and a to experience the quickly. you this any were But before feel last weeks, treasure you think to few feel done return things market hunt hard about you. out probably experience much how started? have consumers So in as

Michael Hartshorn

you but home it's their generally, versus really homes. leaving customers customer we Jay, seen read. more hard When at returning, have sitting maybe have research, to

And quickly. perspectives very they're very, over to think going their be to very time. are going think evolve different I I

hard So rely I very decisions, it's the opening data country quickly. think any that to really to is make on

I think is evolving everything very fast.

a reliance data. lot So it's that on to hard put of

Jay Sole

much. so Thanks Okay.

Operator

comes from next Bob Drbul from question Your Guggenheim.

Bob Drbul

Hi, good afternoon.

Just for a questions couple me. of

first at the be changed year? is, if there's for you this Just any one Thanks. about Ross dd’s? think at forward has for thinking I'd that, how all, just if thought process at any your both Ross? situation store way us on plans I can curious this And just business opening update e-commerce you're and or

Michael Hartshorn

seven did Sure. On said commentary, in store quarter, opening, we first Ross, so we the as locations. in XX add the dd’s

For we're based in we quarter on on where to lease going the we second not of in And are we're balance open obligations uncertainty. going based pandemic opportunities based stores. to open and in fall, stores the the year, on the the and XX then have

stores. XX year, compares but of to XXX wouldn’t new for I'd time, that to comment So still we beyond stores that's that this and previous we the to believe the stores. X,XXX have this say guidance opportunity our beyond we grow year, about at

e-commerce, view then And our not this I'd on changed say has point. at

stores be going safely efforts Our focus and year. are reopening profitably on and to this our bricks-and-mortar

Bob Drbul

And it. more. just if Got one I ask could

make like ones vendor packaway, Thanks. do about your just give terms would you able Barbara? and if do are they'll packaway? helpful. on that of That Do know I think you talking on be maybe can be the you us partners, think some think to you it? that be vendors perspective judgments good they're good at In qualified that -- they'll don't that

Barbara Rentler

vendor on own packing goods. away – the their On the when is

Bob Drbul

yes. Yeah,

Barbara Rentler

do because is haven't I their might depending year. doesn't and am. sure. they make fashion would what assess go what’s would imagine before, inventory they to what not could I Try my might carry the basics, the it. and won't think I it forward we manufacturer that assess, the mean go goods. they those Well, through done just of would have mix way Listen, forward but type they If into forward, I I want could next of think can to And I carry it upon

you thinking therefore, somewhat be a what terms of you to it when it’s understanding of period pieces sell I that I that the right time. critical to get release good, right understand goods just would it's think there's in it, can to the it our holding sell, or you're would lot of you us at know, similar think sell and to you because be go when when

a I'm would their about a I of vendor. imagine they again, judgment a feel But process and not a how they're together So making then not call. putting assortments

Bob Drbul

Yeah.

Okay. perspective. Thank much you very for your

Operator

Boruchow from Wells Your next Fargo. question comes from Ike

Ike Boruchow

I Hey, including good either the staying all the guys very Hope typically job the I help merch or just line. of I down down? guess excluding could you least, versus us write do store -- safe. think on at margin breaking mean, merchandise margins, on you a afternoon. you the are margin, nice gross margin

be And guidance, And merch you're Just merch where said then this bit Travis, just worse just worse? not margins trying I'm to sure I the little should understand, to guess make – be how should think color giving out. Thanks. QX. a I just in gross model pressure you but to on margin should I be know know margins margins, we

Travis Marquette

Yes.

just margin, the with total valuation the terms impact again, combined were of the low biggest result. the of the impacts really overall what quarter charge is was the That, In drove operating sales. biggest for level –

really the Given and sales, to the aren't deleverage components that the just of significant meaningful. very details related

that so relevant provide don't really it's think And breakdown. we to

sorry, Your of second question? remind your second me question runs,

Ike Boruchow

relative to… QX trajectory, margin merchandise guess, I Just,

Travis Marquette

depend Yes, the relative. product of as completely we quarter. ultimate to the what move on the it's Again, going sell-through through is

what markdowns. the or related to mentioned, really the of I in cost impact hit below As that QX we the those just took portion

But is be And rest depending that risk there we in as of recognized in QX. quickly what could it further sell the we to a product sells markdowns of absolutely going of the be how determine gross will take sort ultimate depressed product markdowns need to and the value that that margin looks QX, the the is what like. so on

Michael Hartshorn

highly how merchandize. we spring a be second quickly sell markdowns merchandize, through we markdown the So, on going and obviously sales to so dependent and in it’s based the then will take then will first on approach, liquidate very to the be markdowns very, our aggressive

Ike Boruchow

Thanks, Thanks, Travis. Michael.

Operator

from Loop Capital. Your Champine next from comes question Laura

Laura Champine

will Barbara, metrics Hi. curious what you have you, you – you will that should big to to when start when to factors would for fall decide and the how that And be? am use buying how or start back-to-school. will I are buyer the

Barbara Rentler

or How big be how…. just the buy will

Laura Champine

exactly. Exactly,

Barbara Rentler

big? the are you the size are to to you you you how of if not you it case think Well, deal buy, need whenever might buying it and/or I our buying we you buying Just what a know are think was huge pack away. necessarily in

into to and going conservative which much we we there are going speed so there. with since buy our plan buy, control is uncertainty We’re to go at of fall we the are rate to going and so goods, spending, out

offered However, customer deal. if the making large and think from great wanted there branded was a a wouldn’t bargain, we have was and But that depends. I we it great thought value it unbelievable stop a deal to the us

to much something terms the we going lot again, in spend, approach the what deal spend in it each how we incredible packaway to out to it, But the but to unless we going we of are and we’re control is deal which different. of turn stores, is want to a conservative might buy a be not go with plan case or and

Laura Champine

to fall? back-to-school carry your on can buy initial that make delay for for for when what what I and how you have mean, back-to-school? to will you And the to buy much decisions

Barbara Rentler

going if not if are we what know back, when sure of to now, going going even first we back, are there's right going all, to schools be back-to-school could right? look is schools I I'm Well, children remotely. learning challenge like, mean,

that's question it, whether think the is way a a the true I of So there know traditional we first back-to-school. back-to-school,

July, goods through. on to in way We're that can we out we If get the line us buy. going and new stores, we have have liquidating. come I again, have We're those still on open getting normally August, September through liquidate. because, to planning buy buy that how inventory trend and front based goods we on to determine would we buy it the then take close would of it, period, do, We're as as much this the continuum, we for planning

of going we’re conservative going come thinking factors stores is and once back to So not this respond, liquidation we is country. are very we’re whole it's the and customer shop the how willing it, sure there's a but huge lot after there, because she in period plan, a the open get to through across into all

seen. think, So, I be to it remains

Laura Champine

you. Thank it. Got

Barbara Rentler

Welcome.

Operator

Your comes Alexandra from from question Walvis Sachs. Goldman next

Alexandra Walvis

much negotiations Thanks would evening. with so you Can here. and achieved very that on reductions you perhaps question second My Will permanent taking can there talk deferrals rent you achieved? was for be the the for Good quarter? share April question anything So landlords. any any that about helpful. be into

Michael Hartshorn

Hey, Alexandra, it's Michael.

get to this Our this into across are the point, closure. real our deferment engaging we to either partners our at estate the of landlords. fleet the period with critical negotiate costs At negotiations retailers, many relationships the we wouldn't ongoing specifics Like abatement of long-term landlord are business. point, success obviously other occupancy are because or the of during of

Alexandra Walvis

All you. right. Thank

Operator

comes next from from Your Michael Suisse. question Credit Binetti

Michael Binetti

questions. for Thanks my guys. Hey, taking

the gross to language just margins try and you wanted I First, some of earlier. had clarify on

looks took its an points like So it X,XXX basis grosses of million, over the X,XXX, quarter, in you of charge in to impact quarter. $XXX this a the

referred just you to that as small Michael. was it, That a – really part the of

I So about as having talking sell see not you and want inventory about to talking we're to quarter, the you'll estimate we're inventory below next markdown, to cost, on that – inventory an look that's it. selling put reserve, be you then

who commit impact that, you the order I'm first stores, component as it that magnitude the the to quarter? stores what size? close reserve apartment and to saying for of company, to Is to that, be quarter. could mainline of you're be, I compare the some not first will guidance charge the this that the big but similar mean mean, in to And did of But, be to that in could to get the that of as that I you think really trying

Travis Marquette

Yeah.

So, of again, step are – on just Again, cost the let of the take we a portion we accounting. kind me method recognize back. that

is sold. product recognized only the If gets item are below cost, when below then markdowns the typically, recognized portion immediately. is that cost the So markdown takes in that earnings

end is we cost. the the position end assessed our of as So the just below as the we've original portion at QX its portion product quarter, that inventory of that recognized the take markdowns the of of

Michael Hartshorn

It's be we second markdowns to And to what necessarily expect the we've taken. not it's quarter. happen already during clear,

Travis Marquette

markdowns to door. the ultimately, Again, recognize we'll out on product is correct. relate as Correct, the sold, it what it that QX the is the depends markdown in as goes

on now, the product on And rate how so the to and/or depending ultimate take sales, markdowns, impact. will we'll that's that go depend depending first those going sales. on have second rate that determine of and markdown on markdowns markdowns of deep Obviously, third we

Michael Hartshorn

answer yes, to – be could quarter. short a second question, could answer yeah, be in the more your it than But that it to

Michael Binetti

dollar, to Relative okay. the

wage be pressure, you've supply Okay. and easier like currently are and lot -- going, do related that's as little more little one roll but and obviously, costs, we going And standardization like where from they of year? some like mean, intense costs some easier. have seem of as mentioned with a would that what a here, from enough the than Those that that the we aperture like a new back XX% anything to you enough the pressure know I'm don't related takes they'd out COVID-related wondering – – Things that's of growth a bit, to and just to Is of a but could are take look up been freight puts things that argue the country energy had those see there be unemployed, through the stores, COVID then to other in you those have big forward. – you offset very perhaps chain. those I

you how little final to will know a what question, And dividend go, along your just would you earmarks of then think love help way? the as -- alongside us you at we are for the the reinstating on look if could you some how look bit

Travis Marquette

Yeah.

Let me is this – Travis.

of couple Let me just cover a those.

cost let things couple of you terms of savings, go through In mentioned. me

pressure are that that to particularly obviously, a we change those, the is the different, now, of situation wage would there important places. no wage yes, relates there's least forward but at experiencing mandated rate be been minimum terms as increases. In going to but rates, economic lot And other some California, of wage of statutorily very it's remember in

freight exactly Again, it's helpful. overall down, rates. the Obviously, happen fuel it's freight hard rates going and say are happen could really in to to to speculate be of to capacity terms what's hard But in that going markets. what's

lot to again, So puts and plays There's it and there are -- have we'll see out. uncertainty. it's a takes, of how

exactly So we don't know.

needs have again, is we're of the greater business a trends long-term. on the what In and that trend are the the relation sales reinstating to of I over the the to what's terms the dividend, sustainability factor critical in visibility of have think to what much short going that and those is, both

a going are number before so to that of reinstating And there we're consider factors we would the look at dividend.

Michael Binetti

Thanks a lot.

Operator

Shapiro question comes from Marni Retail from Tracker. next Your

Marni Shapiro

the talk store to Hey, little hear curious a next leases good and that for and them slowed signed we're everybody's bit to Could pushing – or about this you've sound intended clearly, signed you okay. guys. those that are you if openings? yet. year, those them leases you've I'm You weren't It's all voices year. you just glad

to you at And push be, thoughts don't there's maybe next if to to how maybe opportunity curious where that on down and there open those that year. you was better many want push – XX? easy it as I'm number the just so your prices, are

Michael Hartshorn

Sure.

cash new as this And open the that next But post-trend to the of the for many on Many how year, on as of pause we year. view make at decision store. into better those wouldn't opening we in comment not certainly but that lease through on next leases what this On further sign a get year, the the could point we openings the stores next the then we'll move time. for get pushed will is year. only we'll made obligations, be year

Marni Shapiro

– and then somebody of publicly traded, That medium work follow-up. follow-up been a do vendors very cancellations, not – the with how with asked retail? them. And you those of this. just how small how Barbara, I makes the and partners lot given a guess, in these the my they're you guys, be knows with relationship shape is, companies They've Are not ones big very you of about everybody you guys? there working we are all would of are with because I'm them you all department – your stores, sense. time. curious some supply guess from and do for could just don't long vendors, And across tenuous not and the how all talked but one that I you packaways about

Barbara Rentler

all buying. buyers working opportunities years business go And same for see obviously marketplace, with the back then obviously, we vendors. there. keeping doing been and we've Marni, all what are our The into shop close been we're out with when out They've we'll been and people shopping relationships. haven't those

Marni Shapiro

what to off luck unless them everything. them and stores. you I hard Best to of is Yes. guess, opening are do else buy there going make

Barbara Rentler

Thanks.

Operator

from Telsey comes Your Advisory Group. Dana next from question Telsey

Dana Telsey

afternoon, everyone. Good

an Do much able you're may before? as what fold? the lower variable of sanitation of combination of is staff be extra the think rents, you going you or you. how do thought store obviously of about of think a do with Thank into in How and expense more And coming forward you store about some operate. for need on within and the had you of to there thinking you treatment As the whether limited structure the opportunity expenses, it's measure with to and back a fixed that's as hours expenses reopening needed the it? terms

Travis Marquette

we cost we going difficult, it's back lower. where to at significantly looks as But stores as managed Obviously, to by the are do – I we expenses pull sort can. think I specifically demand some pulling be to of reduces environment, that drive Dana, our least If extent. shorter Hi, today world think about to store the we've we payroll pretty have the always hours, stores. the

not blanket just we a out. hand that lot there's hours of So

additional other cost – to overall And manage need of cleaning tasks complete social are distancing, the reopening on and for an and to we have to into labor so to account we take impact as things. stores. Again, sort going that's

though, continuing actions we've reduce of and taken number clearly, total though continuing evaluate P&L, we costs. our we a So look, already our to even to to are are

we'll – across and continue P&L. to evaluate continue where we savings to the can We find

Dana Telsey

side then and Thank And in rent in not Ross, any running DD’s occupancy? occupancy the at And side, there to getting payroll of or is is costs back manage it Ross different more you. is DD there as difference Stores whether up operations compared is the and all? or there to terms in on in of terms

Michael Hartshorn

very both wouldn't there It's similar I Dana. Hi, say across chains. differences. significant Yes. were

Dana Telsey

you. Thank luck. Best of

Operator

Your next from John comes question Kernan Cowen. from

John Kernan

afternoon. taking Most answered. Hey, of question. been Thanks good for my them have

anticipating what what base percent you store us to the then you your Just of have tell end are have the July? end May? of the by open open by of curious, expect you can And quarter to in

Michael Hartshorn

when us I May, specifically of so. you open allows On so the ready the state government tell Sure. do openings, to pandemic but when to us wouldn't we're to stores and the do allows

So that's the will of out happen. our actually when openings control of

opened we'd is that could Our chain have monitoring expectation, though, we're change by end that of the June. based on what the

John Kernan

you. Thank it. Got

Operator

Merriman question line And our the last comes from of Bernstein. Jamie from

Jamie Merriman

opportunity extended and Thanks. whether the to be front? that if – new aren't new base just relationships, And the vendor see then much. as very in but buyers canceled they're understand the base. buying you and with an vendor your question, more during needed market, whether on just And opportunities the this pursuing payments Barbara, whether grow that My orders Thanks I existing to the quarter? on currently is vendors,

Barbara Rentler

Sure.

little In open are more merchants flexible there's opportunity resources, the always more And growing resources. business has for base, especially now, continue the as bit a are gotten some new us little a to vendor to to an open of terms new people difficult. bit trying

we're buying business forward. to trying trying still move relationships, build to people, calling still not, the So or still whether

Just say again, vendors? of about the second question, your part existing

Jamie Merriman

to you had cancel liquidity just payment and terms orders the during extend a from Whether quarter, perspective?

Barbara Rentler

on did pandemic to the we what on beginning started. orders Initially, when did. in retailers cancel some was of action we going other first took the very the But that's similar what quarter, when

necessary time, position we that So actions to the at we thought took were that us.

with vendors now, that, situation. feel we And to to other we relationships we a very we'll through with get our definitely we can the unprecedented come way way we have then took in positioned this actions the retailers better position, back, as continue after but so actions, ourselves manage remain that engaged took

working back So coming as vendors again. come with the back we into and market, be

Jamie Merriman

Great. Thanks very much.

Operator

closing for back now And turn remarks. over I will the call Barbara to Rentler

Barbara Rentler

joining today. for us you Thank

of and to health your your out you go safety. continued thoughts Our for and all families

Operator

gentlemen, this you concludes Ladies call. conference and participating. for today's Thank

You may now disconnect.

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