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Five Below (FIVE)

Participants
Christiane Pelz Vice President, Investor Relations
Joel Anderson President and Chief Executive Officer
Ken Bull Chief Financial Officer and Treasurer
Paul Lejuez Citi Research
Edward Kelly Wells Fargo
Matthew Boss JP Morgan
Simeon Gutman Morgan Stanley
Chuck Grom Gordon Haskett
Karen Short Barclays
Michael Lasser UBS
Scot Ciccarelli RBC Capital Markets
Brian Nagel Oppenheimer
John Heinbockel Guggenheim Securities, LLC
Paul Trussell Deutsche Bank
Judah Frommer Credit Suisse
Jeremy Hamblin Craig Hallum
Michael Montani Evercore ISI
Anthony Chukumba Loop Capital Markets.
Call transcript
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Operator

Good day, and welcome to the Five Below Fourth Quarter 2019 Earnings Conference Call. All participants will be in listen-only mode. [Operator Instructions] Please note this event is being recorded.

I would now like to turn the conference over to Christiane Pelz, Vice President of Investor Relations. Please go ahead.

Christiane Pelz

operator. you, Thank and Below’s everyone, results joining today us call. Good quarter thanks and Five fourth financial fiscal for afternoon, for year conference XXXX On Chief President Bull, Joel Financial today’s and Chief Treasurer. Officer; Ken and and Officer call are Executive Anderson,

the formal their uncertainties unknown made and the to differ remind call are the press constitute are to to and Litigation risks we will call that forward-looking both SEC Harbor to uncertainties call release pursuant and may actual certain materially statements. within comments Five that Safe known statements we The not made update today any statements. to has forward-looking our open of could XXXX, the I are made do questions. of statements Below's to of management forward-looking such and Private statements meaning date Act remarks, this subject Reform After this results as and described cause and from need you obligation filings. as Such undertake in the provisions amended. and risks made forward-looking the are during of Those Securities of

have obtain If at Investor a today’s do you of may fivebelow.com. not you page of release, one press the visiting website by copy Relations our

turn over will to call the I now Joel.

Joel Anderson

call fiscal discuss detail year and will to quarter Thank quarter over I you, the then Christiane. in XXXX, our And as our of before joining questions. the end financials more thoughts earnings on Ken the and call. it us thanks fourth open everyone we for well review handing for highlights for to and as will year

the Covid-XX. has I us our offer want to we our are impacted thoughts speak community. This on and to global truly how I reminds a results, outbreak world Before

everyone prayers and with thoughts are impacted. Our

very we difficult X earlier stores priority for is a associates extent the and p.m. evening effective to this tomorrow at is closing rapidly today and customers and all health the situation. It duration announced of our Our and wellbeing determine of evolving

providing this first or be So at we quarter year not guidance full will specific point.

on to our We focused financial with be great continue and the managing strength. maintaining discipline business

Now conjunction expectations holiday our quarter, our were sales the in turning announced fourth QX in line with revised release. with to the results

potential from were a driven the growth remain new ended stores by United which stores results which Our which in in a States. strong six opportunity. plus We performance X,XXX opened fourth most the XXXX new opened see third significant in our the little of we of stores XXX quarter. over with year represents XXX We the

ICR conference, As previously on at stated relatively Christmas and the Thanksgiving January the between plan. periods were

from was the period Thanksgiving up shortened impacted holiday by selling leading to Christmas season. While the

on shifted days. lost for key saw we a perspective, comp be selling to a Lyme, periods we make seasonal what continued Our merchandise call selling holiday were and were or to world the Create, trends journaling. basis strong. up like gaming in enough strength other our now not positive and but From Candy

X. was trend the large expected As quarter Frozen for fourth

Below. Five was Our included many lineup amazing X to exclusive of and products Frozen items

reach situation on On for Below Five sourcing we year negotiations, XX% front, the and our the our increased we our fluid of considering well significant vendor of shift including and changes to first impact on many response Overall transformative business for was TV a for as the $X changes the time. and to tariffs corporate multi-pronged marketing tariffs continued a throughout XXXX required XXXX threshold with XXXX and beyond. to making digital The efficiencies break decision were a and had pricing as towards stores. approximately our fronts

make the pleased the work And our extensive our we changes again pricing organization results for I did with before were above all once their for collaboration. teams $X to am support the well vendors required implementation. acknowledge to many thank changes and The and these the in them they throughout I want got I want to from thank that sure expectations. the analysis were line testing executed.

Regarding teams diligently and successfully make our sourcing research front. sources on made merchants production, new of and and new that changes to opportunities continue

XXXX all enter expecting We mitigate tariffs. to fully known

an Turning understatement. to Covid-XX. company this be extremely these Below on cash no I debt and with are we XXXX, times strong focused remind would reserves. Five an we successfully you with event an unusual is say through once-in-a-lifetime that managing To are healthy

when more extreme you ways base I'd In value underlying an as seek Well we to quarter-to-date be spend addition, like better our understand our business. will they offering customers of so the our not practice, share even update to wisely. to reopen performance the our important on more even usual

our rapidly Wednesday have they Health we shot comps through X.X%. a the new day March pandemic, up the Through environment. yesterday were working declared Organization associates. Our amazing been also X.X%. They've adjusted to a XX, World and are like to a Covid-XX out to give I'd

better As through we Experience, we our this remain innovation continue for and and associates driven customers and chain. trend-right continue strategic a three supply product the on will we areas. merchant also experience as we Through deliver navigate will WOW organization, period, to focused to products. even elevate

efficient are the and cost ensuring chain shelf products the store is on key Our in and basis. a supply timely in to

make And building are enhancements to our DC out infrastructure these possible. we

Below further the XXXX holiday it going on In addition, our that test me Ten displayed experience from stores on and update gift and store let XX will throughout Ten finished a the shop chain. impact We have Below Below give learned forward. with the was overall you Ten a lot

at store range. benefits to forward priced $X in and the remained worlds. square provide Tech products in decided worlds include to and that to $XX space The or the enhanced allows new having below. store of total format our new move expands to the reallocate increase from Room our previous of prototype fresh without footage all $X will other rest with an our the to have prototype We us offering This

We expect and all our near of stores open in remodels this to nearly format.

technology growth demand on vendor modernizing our platform IT merchandizing core including implementing front, on supply out the distribution drive to several transactions, digitizing our support addition and and to data transportation analytics platform strategic are cloud optimization. with for systems, chain our rolling and In new management working forecasting based we initiatives inventory

Additionally, have. we DC are systems future accelerate digitally than Holler customer a will well which platform technology as with lower support better service capabilities and e-com will well these our and our migrating as to capabilities. class robust place, configuration the is we Having fulfillment in we Hollar.com our native digital growth. brand

pleased are are we to These with navigating on growth. and experience, members future of unprecedented times further strategic and with at initiatives time, team support At In continue work center our our summary, making. innovate XXXX the performance. we we and supply same we across decision product them chain and are customers number our as the

turn I'll Ken? to provide it that the on With over more financials. color to Ken

Ken Bull

Thanks Joel. And good afternoon, everyone.

As the Joel balance is that benefit our with managing we said, With regard financial are quickly. assets in and we the and of changing health, adapting environment rapidly to strong operating an we are business we discipline. our sheet are and have the

XXXX. quarter Now, discuss results fiscal then and I'll our XXXX fourth fiscal review and

of in the the quarter the up XXX stores sales XX% We fourth ended XXX. XXXX of year-over-year XXX $XXX.X from with or fourth stores, Our were XX%. quarter increase quarter million, of a

million in fourth quarter for quarter for improvement of XXXX of comp XX.X% incentive The fourth X.X% the a XX.X% compensation incentive percentage offset X.X% XX.X% merchandise of margins, XXXX due for a decreased compensation costs. by by the versus decrease and quarter SG&A comp fixed from improvement increasing increased offset The the XXXX comp $XXX driven to decreased year. occupancy X.X% in at Gross from ticket. on sales transactions, fourth reported deleverage quarter fourth offset gross basis sales quarter XXXX. points XXXX. in quarter margin finished by comp. of in XX.X% of the in of XXX the distribution efficiencies, from lower in to profit X.X% Comparable lower was as was partially a increase decrease $XXX.X deleverage as last XX.X% store Gross increase fourth of was the by million in negative fourth costs in to comp the average margin partially

XXX to million. operating points Our increased $XXX.X approximately income to sales. basis of Operating XX% a increased margin XX.X%

XX.X% the effective in rate benefit fourth discrete tax of the effective in decrease from quarter by rate a items driven for XX.X% to the The was was compared accounting. share XXXX Our tax of XXXX. quarter included based which fourth

diluted quarter income per a for share from $XXX.X or Net XX.X% last a diluted $X.XX or share Diluted both earnings based per share accounting $X.XX million per from $XX.X benefit in $X.XX share a fourth the included year. million years. increased to

a increase sales a average increase an sales sales net by driven This a increase were increase X.X% Comparable offset total comparable in XXXX. of partially versus sales million, XXXX, transactions. increased in fiscal X.X% X.X% comp For was by decrease of comparable X.X% comp XX.X%. in $X,XXX ticket,

profit year XX.X% on in basis XX the as lease in occupancy compensation. basis margin XXXX quarter, the of in XX Southeast were of Distribution by incentive Gross offset offset the the points accounting the XX.X% to increased on Gross and by all by comp. lower-than-expected million. deleverage lower driven the for merchandise XX.X% fixed percentage points approximately costs, year rules, to margins depreciation full by for to of $XXX fourth primarily new increased a from XX.X% due sales increased SG&A partially of Center primarily to increased new which deleverage expenses part

Operating in of year's basis million of decreased increased XX.X% income XX.X% XXXX. of last XX%. points Operating operating margin $XXX.X from margin XX approximately

versus in share XXXX, rate due the in earnings the from rate earnings XXXX. tax $X.XX of benefit share for an Our to for in accounting. benefit a $X.XX XXXX per per XXXX. $X.XX Earnings increase $X.XX and based fiscal year the share effective share year were Diluted decrease included was based for tax XX% of accounting compared XX% XX.X% share in primarily benefit of fiscal XXXX. per The to the effective was for

for grew of and included the both rate EPS the Excluding combined impact last from approximately $X.XX XXXX the fiscal EPS $X.XX both versus based year. tax Street in Gamers investments. to negative impact approximate holler.com XX% periods accounting Nerd share an on

We cash, available year equivalents $XX ended and under cash revolver. the securities debt in with $XXX our million million approximately with investment and no short-term

end of store XX% year-over-year share of XXXX, receipts, at merchandize. pulled million lower than $X.XX of or inventory made approximately Inventory $XX forward the shares $XXX compared on end approximately year Ending and at million as EPS. XXX,XXX timing fiscal the fiscal the we sales related increased contributed $XXX.X the expected of to which to a was approximately the XXXX. tariff per due For as basis to million we repurchases

CapEx, had we level inventory are fiscal pleased of investments high we stores, we In and opening southeast merchandize on XX excluding going allowances. $XXX the World seasonal the to our in XXXX, spent sell-through With distribution with of reflected tenant into XXXX. the Now quality a QX, XXX opening cost the on completing million in respect and our CapEx gross remodels new new and This payments in center center, new and systems infrastructure. distribution Texas and

XXXX. to to I'd Now turn like

mentioned, of given sales the financial and are events of first year unable full impacts Joel XXXX. nature to and As earnings uncertain we Covid-XX, future the quarter and provide for guidance

of what was XXXX will fully bottom However, which in XXXX until to in We XX%. our current in fiscal XXXX for discuss and XXXX to remain vision. longer-term tariffs provide growth place that impact would we outlook With were week, I we assumed of last did the prior XXXX. situation. was the with an our Covid-XX as XXXX. to throughout outlook we prepared line mitigate expected Until line The for fiscal top

from of based new outlook XXX approximately as Covid-XX, income financial and future sales on range. points. sales approximately basis XX% related in XXX impact store low the our growth follows. stores sales comp cannibalization single with was impact a openings digit Included comparable in and a estimate Excluding to our the new

Our full based expected of was tax approximately impact year excluding to XX.X% accounting. effective share rate the be

As you earnings. with update the report results know, our practice actual when quarterly we tax outlook rate is to

the to hollar.com investment. per estimated in was $X.XX accounting included the costs to in $X.XX which Street first and impact of year integration the earnings half elated range of the Diluted Nerd the $X.XX from share Gamers

a excluding new allowances. That's new and the in million Texas, on approximately investing distribution finally, west opening XX the and of expected XXX investment, approximately holler.com the of based $XXX approximately XX%. the reflected tenant Midwest impact And centers accounting and in impact capital center of Gamers Excluding in and initial impact XXXX payments in XXXX of Nerd Street was well expenditures share remodels, as growth the integration for EPS we stores systems distribution gross and infrastructure. making as the

Again this discussion additional but was guidance. designed it to not give about information XXXX, is you some our

related our refer details results, our other to to press earnings please all release. For

back Joel up Joel? to to I comments the And closing provide over call like would some for it we turn with questions. that open before to

Joel Anderson

year chain. Across are Thanks our living as Ken. team tariffs XXXX now. strategic period Below was very experience, around a successfully objectives for and very supply mitigated productive while our the a Five through product people challenging world, advancing right

for of out today our I Here associates strength Five customers. hard grow want resiliency dedication their this their kids. and from come Below unmatched community. from of inspiration we're at commitment and ability it is Five We're we drawing and favorite embracing making to Below, stronger to all a for what our to thank to are we challenge their certain that together will customer, and and our

our and still at incredible deliver an to customers. adapt amazing decisions make value provide experience differentiated environment, innovate, long-term and we continue products as to to be to focus changing relevant, the are rapidly goals WOW Even our to

capitalized well our believe to the for I'd we We over are back turn operator positioned in future. continue With growth Operator? to like call the to and questions. the that

Operator

[Operator Instructions]

Citi Lejuez ahead. is Paul go question The with Research. from first Please

PaulLejuez

about closures a your the also number some outreach talk while does also that maybe TV if dealing environment ecom general. thanks sort in store efforts? and store how marketing this going of how of you're how about you with be openings. for can Hey, manage marketing you now And Appreciate your going curious customer you're then to comments. to guys. efforts Wondering Any that and change change, stepped-up the

back out applied or know going to be and that didn't and well laid said going you're store your I kind then CapEx no if if Thanks. longer your you've plan pull that. think what place. was to as of openings to was I that on in

JoelAnderson

thank you. Right. Paul,

efforts. let me So the marketing just discuss

to the time. this first and place that's quarter it As we've made really relates at changes only any

the circular not back run Easter pulled for have and this on We year. TV that will

in We place, focused with or it. on business in efforts our are ecom having keeping no case are are problems in we that that increase leaving and and our digital seeing an and up ecom

and you'll to still And for plan although cadence XXX should, for that As stores change this is expect one just should those the it's stores. in on our us at certainly time a early you too keep would get to guidance Thanks you can Paul. great on you. here. look question so what cadence be that'd that give through everybody we like. everyone new Thank I remind it to

Next?

Operator

is question ahead. with Please Kelly Edward The next from Wells Fargo. go

EdwardKelly

Joel. Hi, Yes.

for going much with and would need entire as again? how that if cost question first what variable closed So open just cost about you are fixed, structure, see us think you? we what's an stick the you with the quarter, structure what's And then help out of for to the beyond is stores is stores to

JoelAnderson

was about stores? that what closed Yes and question the

EdwardKelly

beyond and how that it again? you? with to then And stays Well need see cost stores the much just to initially would you what open structure

JoelAnderson

tomorrow we you this Friday stores to well not associates customer it'll week in Look, route stores can we're a open as in. freight the facing lot in that be will all -- remain to of stores. our taking and and shutting imagine we're customers so the Yes. as had down

open we guidance to so and should will preparing So resume to and but a it it like. it's it's back chain to with point as at Ken what will we'll disruption that. to able start too state stores the I I'll had any be to doesn't notice to national in to trapped in opening turn then think safe be get we point local, open. to look speculate honestly And there stores want any mean this early supply as moment's that stay you. compliance up, take far from turn I but when and at to

KenBull

merchandise up is Yes cost related our and are of variable you you there is XX% guess and some too. record as the goods at when some cost goods we but of fixed in just obviously costs look structure costs of Ed about SG&A cost sold to of costs occupancy cost then because around in majority fixed. would there sold SG&A a cost, there buying And

idea give kind an So the of you cost again in P&L. just structure our of to based

Operator

Boss go is question Matthew Morgan. next ahead. JP from with The Please

MatthewBoss

call are and higher you how core during to is the Great on if just up economic look, past maybe near has far your all the times Joel, there's maybe a we get for the can so of side out took stress? thanks Trying on come really not the back, you for a sense there or unemployment guys. model the other held step color while changes a as term closures this of consumer. speak to compare to if

Just side could that anything you how on your you coming see relative of position today peers? And do to to proposition out bolster value other the this.

JoelAnderson

was give look will customers might things in add don't value Ken time certainly were of Yes initially prepared that that very of little a as look back remarks, out I of to to I it XXXX out they get had you are where if real us let dollar period. during you this be turn coming XXXX. and back as my type Ken might as if color. to was back for and you think their a more stretch actually customers financial going belt place to to know, back and I in until and more a successful XXXX this of but recession. the XXXX a and their normal anything here He We coming XXXX and tighten speculate

KenBull

ourselves XXXX think gate. the out here impacted a retailers there discovered there during shock was It day. was that I the from point were right initial we really perspective value quicker come we Joel's think XXXX Joel and Matt, out were at I of than did the fell the that it offer I of all other No. think But going customers I time the we through obviously see end were that back. traffic retailers because to I think who another was and it. and answered choice able period

other for So and on out as we somewhat quickly. end came ended positive relatively that being the of came up out it us

Operator

from The ahead. Simeon Please with is next Morgan go question Stanley. Gutman

SimeonGutman

means can could was fixed numbers think off? day costs that helpful My some the gave question and close to gross to was can math needing worse Good of what long was on ourselves? how any you us tell revenue gave I XX-ish you days but the out but somewhere afternoon. getting the guess done don't the numbers that close progressively math leveling percent helpful you've you is I no was decision which which going down us and those to it than get you're know cost, Do or we business SG&A if numbers you And record each do of margin. I know it this quicker without doing liquidity. conclusion Ken

JoelAnderson

initial we shorter days. concern of as comp about ballpark. and terms transparent high time. you true little expressed think be on can't for I to there it on what be it on to try we give you your whether us through in important to the during think be It do the our it shaking the was that but holiday a of negative extremely in period many I up. might quarter while of math as was And pretty the how it was guidance always was you're right was down consistent And

the to is scenario. that lot upper we wanted planning It's lay a And, it's we'll anything early look have that commentary where of gave to and you. obviously Simeon, but single you that's with this to sheet. now. this that kind do color on matter too you to digits very end our of on it's think scenario early Ken, to start I share focus do strong really balance out time low at to we'll and add? what right in point every at it Ken to of returns too

KenBull

call, appropriate the even growth. we but was and in are as efficiency. I an in we mean what value mitigating in tariffs been faced challenge doing are core terms it's with across will of retailer remind Simeon, were mentioned operating of discipline evolves. our really this But agree and I the values the who around similar us business mentioned, actions of to financial as that Joel cost were as in and Obviously And health and the with we we and terms our our everyone. and I a go front we maintain Joel the Sure. will one we has for, of with that. situation put extreme successful future situation in take always

JoelAnderson

Yes. I honestly think, thanks Simeon.

that all million, tariffs a to Some last stronger serve better went tariffs pretty go to through we had and manage approach as as that is of us we company probably those $XXX that get and to number this with we will through year mitigate creative well as discipline well. made that

Next question?

Operator

The next ahead. go Haskett. from with Please Chuck question Grom Gordon is

ChuckGrom

to in there, It's is SG&A sounds and going cost if to your progression going comp in Bringing think earlier comp closed three two the down that quarter business you quarter about is structure going be first assume for to we and you're it question or weeks. XX% be next like the Hey, on close a probably to guys. the if the to say XX% fixed. realistic

Can it be with speaking; of just to probably to seems out close math? are like nickel So of up roughly left that probably quarter. the going earnings field way are in Thanks. flat first a we maybe type

KenBull

be results. avoid statements us any the take like And a kind were will we in Listen, before those Chuck. in It's but I with a making had mean for Covid-XX. indication situation as thinking of of we the of look of specific terms before the bit you here remarks Thanks to financial of want of prepared my difficult that. mentioned forward appreciate little we potential gave to really really in the I question especially what what terms

think put leave year. say where it just of situations full yes, for we'll the going mentioned are before in continue So, front we're to we're I about appropriately that react we that And I to to talked that us. going question to as the on

JoelAnderson

Okay supply would we we not the really when chain fully our I as you reopen add associates stores back and is said lot get mean a to do that open, stocked. hurt got go open. through with there's doors of I to and having I just shared the And re-engage and

Operator

The next question with is go Short Karen Please Barclays. from ahead.

KarenShort

for region I state question. Thanks basis? Hi. blanket when to state decision stores region by you're focus on closures. want or bigger excess my all really you by with maybe I guess to that kind store life, guess perspective a and clarification to it had the what at in can this But inventory I one and what a more I Are pack then taking how an a extent from shelf situation? be part is inventory to was with make dealing away if a to respect or much the is going once open you will lifts seasonal terms the of question has inventory DC of of

JoelAnderson

Yes. No problem.

plenty back last of spot on had biggest go several of got we've initiative been And the DC calls fortunate capacity. study kind the last we're a the years in focused distribution for you we've strategically that center expansion. and we've single been If has few

place business receive are shipping gotten we've to got and our we open racks and out DC In in the inventory. not starting fact, all its has -- are certification and while for Texas just now we're

new brand with a DC a it's of now that So lot capacity.

we're speculative worried then And about not that part once we're side or way local to So shut have reopen states but just how stores things all be on would watched our more I at stores, than it of down we've and the it's going things rather as as react. the transpired far at a how guess little all would given at regional or all.

I'm And this watch and completely but Karen. and I national state from how unfolds speculating So there, take guidance some officials. we'll think

Operator

Lasser ahead. next UBS. from is Please The question go with Michael

MichaelLasser

question. for lot a thanks And evening. taking my Good

JoelAnderson

underwater Michael. went thought you We Go ahead. there

MichaelLasser

'

me, with Can your likely and go model going social more once consumer it's out by overall we're locations is physical in locations. to hesitant likely very you and hear to the resistant much traffic okay? engagement to your Joel in be even be and open dependent and see you if stores much traffic distancing that freely the consumers physical

your a might the of week or current to that's even ramifications of think and manage I that good cause? in before state what putting last mid-teens how through down you you impact situation so. indication distancing think the environment do in aside overall economic of steady traffic that low week your a comps Do social were kind how the in even might

JoelAnderson

that opened been Yes. A speculate the lot only in but that during were to I'd you we be the with and of that, Michael, kids XX-day open school. It But down how part of shows that suddenly I much the afterwards a preparing of cetera hunker a customer off and tell every ops on of needed kind fact will handle cetera, we've us we're sure and retail stayed than new the have especially of and brought their kind instituted continue teens. that store to we procedures we've kind reason prepared just as they period ahead. is down register. that teams were of will of sanitizers I'm but prepared Go get way et as to we'll come more We of comfortable in back. lots the way as and be customers is lot did working et and that hand other

MichaelLasser

think that XXX that's said higher something, what than of you've I much cannibalization basis you points clarify I experienced historically. Could

driving So what's that?

JoelAnderson

some as while know we comp never up that stores, planned understand to that we of transparency might to our Michael, Honestly, to transparency cannibalization stores and to want and have some thing. out stores the we the for actually what's cycle built built multiple. into we in kind go building picking focus it's also comp is great as see market you fewer into after so and built again some Sure. into to again And really multiple of we shared that we're ramping bounce number part you all share up and how reason densification that is our is whole some on started the tend ourselves markets, wanted really back but just have new of a areas those year, good we've specifically

Operator

The Please next Scot go is ahead. with RBC Capital from Ciccarelli question Markets.

ScotCiccarelli

Ciccarelli. Hi. Guys. Scot

mid to I Joel, the but XXX said current be plan is with that negatives teen's to year your your store pretty spooky. that for comps called maintain upper know you openings can So, earlier

plan? the flexibility on So is CapEx have much how guys I you prior question guess your do

JoelAnderson

flexibility Sure. tell at Well, think things get bit we'll we there, might back certainly have if specific you all, come normal you I we would have I give guidance but -- back to first we as after quite of actually a stay I and XXX. said, have of

flexibility change know, that was on cadence so sure really we whether we that quite certainly about feel would to into purchase into that overall Ken I of that makes others forward need perspective. For we some those from that a communities up go any and we CapEx have built also that don't CapEx our there but purchases with the plan or good CapEx. not will stores go for but we'd distributions bit

KenBull

No.

forward we as early to get comment the tell. this road, we're too going at probably that But it's evolve. the I all these that bit down us back events little going again you still to look to move but some and the game just be things it at stage think there's here the of flexibility think for a to mentioned to as I are

JoelAnderson

We'll Scott. everything, ahead. at Go looking be

ScotCiccarelli

back just thing if was like you question my for the volume about social guess don't remain like distancing a and does quite while. I a get

going the not potentially much need you're of -- distribution. not You're as

kind just expenses maybe Thanks. put that off ability I'm the if defers of those So of to and an some future. there's wondering of

JoelAnderson

don't on I Absolutely. those I mean talking that's in have about we DC was and make the the days next what XX decisions to here.

So customers based the this out also through change. us need you timing even we're think value doesn't a I works that mean I growth And are and when to more model. with company going come nice look, our our

KenBull

Joel that Right add too. and just to to

sense we're be, financial think business all going just across to again we and at us position I to what add move the I forward that mentioned it liquidity whatever related it forward. just Scott, makes see So, may look go to the to for as to our potential actions before

Operator

Brian go ahead. next Please Oppenheimer. from is question The Nagel with

BrianNagel

Thanks holidays effort this the for pushing maybe Hi. question. we even the Good talked for Thanks the color. further. Question online that afternoon. my all have you're taking about through and I

now I So and becoming down as look I online mean further couple shutting -- and stores. what so pushing Is with happening parts? guess at topic like a Because you online more building to that what's you the of as offset virus store beyond then are -- your focused to out look more as near in help online closures a the what now that could operation on you offering? term? extent existing these larger the

JoelAnderson

made the long this along. in Brian forget Holler Yes, investment that look, before we don't came

and So the digital for strategically. capabilities that right our to long accelerate to our belief and term being was the in enhancing able necessary were do thing

done Covid-XX associated independent the with and that was ramifications So of that.

small business e-commerce on short very is call the far as every a in of business. still it we've piece As said looking our at as term, the very,

So and for this we back smarter the year. Below, I business uptick ties investments Below it's has short-term Five a than changed made Five in why suddenly the did a for than right look the on term, XXXX. it is is think next business even here strategy not And decision as for significant last but into long that fix we it we the months. just in model the when it But three seen seemed the don't it made it

Operator

with from Heinbockel Guggenheim. The next question Please ahead. is John go

JohnHeinbockel

Michael obviously this? when about you But So but he's making plans of given fluid. how is is the Joel, that beyond the fluidity long changes term, sort of it's think Easter not receipts, stuff impacting pretty this

JoelAnderson

Michael's mean year, it'll impact on obviously I very that an but really the putting and organization capable people that aside in Easter better continue probably look, prepared. have our and been We GMMs beef last up teams brought in two Yes. invest organization. never senior to merchandising staffed,

store what this. to opportunities and scale the forward we've past than much of are in great years but we bigger in we at ago. are once see move normal I especially and move the of get has disposal a nothing But you benefits because below upside you And merchants were as the now with think problem. couple that couple how then Michael have we ten more his back a now there situation of for opportunities the of so gotten what company pipeline a we when

Operator

Deutsche question next The ahead. is Trussell Please with go Paul Bank. from

PaulTrussell

afternoon. Good

just You spoke but, in this and outlined to strategic some Joel, year experience product supply chain. you for of this the release priorities were your

a to side to you actions push what those and you're achieve bit on virus priorities? talk to taking goals about strategic us wanted what to So maybe some of kind the to extent forward the putting

JoelAnderson

important for Paul, you our has me the more depth, distribute us. will get quickly path let calls, stores certainly XXXX little days. but that two I be all less we're And color than not chain been go is it we able by to think of in question, looking thanks Great positive the as we in back holiday And and the give front a into just to down because more that to for supply and it right. of Yes. heading is we'll normal case

back have we a regional go in days were to You'd when old Northeast. the our just to player

So significant comes strategy that's and year. together that been a all next it's change nicely by multi-year a and

single And coupled the think here a prototype. lump those touches the enhancement new biggest is just help it second this then prototype new getting we're spring we product into because I open will out the experience the west will product. in in We're that getting And up let detail, facility significantly. really for experience really and together the close Texas change on which and us me making to a with real without

now learnings I to footprint. size stuff all of did gift take just to Heinbockel Below of were the about Some the that as to bring the into shop and was Ten from talking from able new having the expand John we the without we prototype one

the explore to about So price $X extreme coupled and merchants' efficiencies tech then $XX. getting in you leverage unleashing especially to room value with really and talk

certainly those come a color to time that gives we on back little commentary So we'll just a as spend you to three as hopefully continue that, get more and on color. but little it to quarters comes together

Operator

Frommer from Please Suisse. Judah from go Credit is question ahead. next The

JudahFrommer

up kind be Thanks variable online? anyway How cut timeline? did taking to actually of and for much if pulled cost to DC of Hi. size that volumes just there you of have rehire what you on the could Is the cost, that wanted kind tied that is with can on out variable depending SG&A, I reopen us is of follow question. come there Ken. help some you labor expense would as store and stores to back or and the

KenBull

go-forward this a and Yes. Thanks again this for fixed we specifics appropriate the to take as at there look action move that on some the but across something business. as the are no volume going of out, I costs from game we'll there's dig we certain that a this obviously forward. and we provide costs again we're the of basis beginning stages is But before And of aside question, saying the at look mentioned called at we'll variable stage as Judah. and are that into, to at

JoelAnderson

hope can you I there. we're And why understand not

associates. said I taking our as has call been in the care priority first Our of

of several the field turn had a and for strong close really in we'll start XX strong calls to for last a company. need and of capital reassuring out so And enter we've that in this there with so and we a additional lot liquidity hours crew understand balance to us. down the then they're questions. And going should behind them now And them some your it. But They to we that's work stores. the sheet with we'll the they be access conference to answering how

Operator

next go Hamblin ahead. question The Please Jeremy Craig-Hallum. is from with

JeremyHamblin

I chain all thank you're supply guys ask and color you the Thanks sharing. question. and to Yes. wanted for the a transparency

where those take Just the sense days things back know time for; of the where -- maybe you're like and like and you're you and I say holiday maybe typically downtick items? us you've like a in from had any you're lot you for snacks were is obviously like chain goods period started accessories. dependent Any have and impact give this your where XX of let's getting place that a Has the plans offer making Asia to felt on shows, Can for impact assortment could fall come imported of in things the things and little maybe Asia to frankly on a to season. color which trade supply have It the tech had lot in year you candy you customers? a to up? ago. bit uptick Asia. flashing an seems that from a Has has a of can of it share terms back

JoelAnderson

stronger big ago. of our actually and -- question, in are significantly to honestly were factories stuff they catch import to a Jeremy. mean I products will working a did great a we're bookings last that flowing, in even to starting four -- the but of everybody, and see you I that in were tell happen just in since five see or starting we supply of is the and this number behind. weeks three we Yes. back almost can up began decrease never chain was two a behind for you every I them one containers can probably months lot has our And And we probably been tell

chain So shape get of I beyond starts about And I think to feel that side But in it. really too that it strong perspective. then little supply from speculative. the a great import just a we're

Operator

The next Evercore. question from Michael with Please is ahead. Montani go

MichaelMontani

Guys. Hi.

was Can I in? goods the you on what that's of past rating the provide you've were the to thinking made wanted maybe in Just now mentioned had that the some China. following all sense that imported run of of put you to efforts some us XX% the from given kind up What front obviously efforts think on you sourcing diversification front. had just I see

JoelAnderson

goods Thanks Michael. our majority China. still from of are The

some As I great job doing Vietnam. been moved a ramp China teams have starting and countries. said to to the on see up we move out into last year of lines my We're the remarks, of starting prepared

and dependent settle we that ago, fact that us you does China than would kind will all but it were significantly be kind to before. see the majority is And what a expect In reassess when continue are to those it few we decrease. but we go the now of less back orders of to still and of understand shipped weeks first will mix were have just

in it's So tell it's you just the but would a I now still little majority. fluid right

Operator

The Anthony ahead. next Capital go Please with Markets. Loop from question is Chukumba

AnthonyChukumba

is to Dallas evening Good you and current you. facility? risk wondering will I I open this in color. situation opening had question thanks supposed mentioned the all quick Thank one centers for the spring already just and that distribution this Dallas the was of delaying

JoelAnderson

but I don't Anthony. situation I want XXX% received occupancy. Thanks this say a don't our certificate to of have want we in Look, to

it. as receive goods could I putting there's from building's shutdowns are to the usual. something mean we're just but like that on to goods delay we're us city continuing ahead moving and take there starting -- the if there's in touches be We obviously the basically finishing that prevent a in done, or and

It's Conroe, delays Houston. I no outside Houston Just in it's you said clarification think expected. one but Dallas, in of

Q&A of End

Operator

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

Joel Anderson

our the to and getting calls. speaking not Have evening. look But forward call after on situations will thanks great a with first we call the you you. everybody We thanks as us and to today. operator commit Thank normal quarter informed to for us. joining you, keeping for again you Thank develop. Obviously,

Operator

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

disconnect. now may You