Good day ladies and gentlemen, and welcome to the DXLG Fiscal First Quarter Year 2020 Financial Results Conference Call. Today’s call is being recorded. [Operator Instructions] At this time, I would like to turn the call over to y Nitza McKee, Senior Associate at ICR. Please go ahead, Nitza..

Thank you, operator, and good morning, everyone. Thank you for joining us on Destination XL Group's first quarter fiscal 2020 earnings call. On our call today is our President and Chief Executive Officer, Harvey Kanter; and our Chief Financial Officer, Peter Stratton.

During today's call, we will discuss some non-GAAP metrics to provide investors with useful information about our financial performance. Please refer to our earnings release, which was filed this morning and is now available on our Investor Relations website at investor.dxl.com for an explanation and reconciliation of such measures.

Today's discussion also contains certain forward-looking statements concerning the company's ability to withstand the impact of the COVID-19 pandemic on its business and results in fiscal 2020 and to manage through the pandemic, including its efforts to restructure and reduce costs, manage inventory, negotiate rent concessions or rent release from its landlords, market to its customers to encourage shopping online and maintain sufficient liquidity, the expected pace of store reopenings and expected liquidity for the next 12 months.

Such forward-looking statements are subject to various risks and uncertainties that could cause actual results to differ materially from those assumptions mentioned today due to a variety of factors that affect the company. Information regarding risks and uncertainties is detailed in the company's filings with the Securities and Exchange Commission.

I would now like to turn the call over to our CEO, Harvey Kanter.

Harvey?.

Thank you, Nitza, and good morning, everyone. There are several topics that I would like to cover, including the current state of our business, our response to the COVID-19 crisis, our progress in reopening stores and our plan to reopen all stores by the end of June.

But before I do, I want to wish everyone continued progress in this recovery, good health and offer our condolences and prayers. These have certainly been the most trying of times for us as a nation and across the globe.

I also want to give a great big heartfelt thank you to all our associates and a few quick shout outs for the teams perseverance during the pandemic, and most importantly, those on the team who kept us actively engaged in commerce and supporting our consumer base.

For the past 12 weeks or so, our guest [Education] [ph] center, which includes chat, e-mail and the call center, which we refer to as our GEC, our warehouse team, our store operations team and our management team have all shown incredible resilience.

And we've adjusted to a new working environment, while keeping our eye focused on what we need to do differently to keep servicing big and tall guys across the country.

This includes everything from how we have engaged consumers to the GEC and the continued fulfillment of e-commerce orders for both the distribution center and 30 plus some stores to the safety precautions we are taking as we reopen stores and how we are reengaging with our customer.

So let me get right into it and start with an update on our business operations. Before our stores closed, we began responding to a significant perceived impact expected from the pandemic. We triangulated on consumer data from Asia, from retailers doing business in Asia and from our wholesale partners. We made relatively big moves early.

In mid to late February we canceled all travel. We canceled all our store management national conferences, put a hold on all open positions, and began canceling planned receipts of on order. In mid-March, we began to evaluate closing stores and on March 17 we closed all 321 stores across the chain.

We began to prepare for a more stringent and demonstrative level of actions that would enable us to withstand the inevitable loss of revenue that comes with a prolonged store closure.

As already noted, we were very fortunate to keep our distribution center operational and we were able to fulfill e-commerce orders uninterrupted throughout the first quarter. A huge shout out to what will be several, I cannot say it enough and hear that shout out goes to the GEC and the D.C staffs. Thank you for staying engaged with our customers.

Thank you for keeping the lights on and for shipping. Our online business, and to a lesser degree, wholesale, became our only source of revenue, while stores were closed, which was critical to keeping a minimal level of cash flowing into the business during the first quarter.

However, as you might expect, the online business will only mitigate a fraction of the revenue loss we would experience from closed stores. Accordingly, we acted quickly and decisively.

We took additional steps and measures to preserve liquidity and keep our business intact, while we waited for stores to reopen and resume some sense of normal operations. We have made a great deal of progress this quarter by strengthening our financial flexibility, by realigning our inventory receipt plan and by reducing our overhead costs.

Let me give you a quick rundown of some of the more significant steps we took to preserve liquidity. On March 20th, we initiated a defensive draw on our credit facility of $30 million. That cash is being held and used for working capital needs as we slowly rebuild our spring sales momentum.

At the end of the quarter, our cash balance was $26.1 million, compared to $6.8 million a year-ago. We took this step to reserve our financial flexibility. On April 15th, we amended our credit facility to expand our borrowing capacity, which Peter will cover in detail in a moment.

We were pleased that our bank group was quick to work with us and to find creative ways to generate additional liquidity. Next, we took several steps from a cost management perspective to reduce our cash outflow. Upon closing our entire store portfolio on March 17, we began the unpleasant process of initiating furloughs.

With a few days of closing stores, we furloughed almost our entire store operations team, and the company's non-employee directors' temporarily suspended their compensation for the second quarter of fiscal 2020. Effective April 2, we began furloughs in our corporate office.

In total, 264 corporate associates, which represent about 60% of our corporate roster, were placed on furlough. Effective April 5, we instituted a temporary reduction in the salaries of our named executive officers by 20%. Other members of our management team have taken temporary reductions in the range of 10% to 20%.

And on May 1, we further restructured parts of our corporate workforce, which resulted in a permanent reduction of 34 corporate positions. We've also worked very hard to partner and work through payables in regards to payment to merchandise suppliers, vendors and landlords.

There's an old saying that the strongest partnerships are forged during the most difficult of times. And we've certainly seen our business partner step up to the plate to work with us on the merchandise side, the vendor side and the leasing front.

We have aggressively canceled merchandise receipts for fiscal 2020, which we estimate to be worth nearly $150 million at retail. To give you a sense of the scale, $150 million in cancellations is worth approximately 28% of our total fiscal 2020 receipt plan.

We have had very productive conversations with our vendor base to extend payment terms, and in some cases we've entered into short-term promissory notes to extend payment terms with some of our largest merchandise suppliers. We did not make our April or May rent payment and our leases for stores and our home office and distribution center.

We are currently in private negotiations with our landlords for rent relief, which includes rental abatements and rental deferments for April, for May, June and July. And lastly, we have eliminated most of our capital improvement programs, all discretionary spending on store improvement projects and nonessential IT infrastructure.

Overall, we have reacted quickly and decisively to do everything we could to avoid a liquidity crisis. We are not out of the woods yet, but we are cautiously optimistic in the course we have charted to get us through the next 12 months without any additional cash infusion.

To achieve the plan, we need to see a gradual reopening of stores and a gradual ramp of customer traffic and conversion. To that end, let me share with you some of the details about how our stores have performed as we have slowly begun the reopening process.

One of the most critical and quite honestly, delicate actions that we've undertaken like other retailers is the reopening of our store base. Our first hurdles were to clear and adhere to state and local guidelines for each reopening.

Once that had been achieved, our attention turned to making our employees and customers feel safe before we open any doors. This has been a very thoughtful and pragmatic process with associate and customer safety being our highest priority.

We've also worked with numerous retail cohorts, sharing our plans, comparing notes and leveraging their plans to make sure the very best thinking was in place for all of our associates and our guests. Before opening, all stores received a safety kit, including face masks, disposable gloves, cleanup and disinfecting wipes and hand sanitizers.

Our store managers have been trained on safety and cleanliness procedures, and will perform regular maintenance and system checks, order necessary supplies for shipping products and fully clean and sanitize stores before opening each day, as well as on ongoing basis throughout the day and at store closing.

We can maintain appropriate social distancing throughout the stores and develop procedures for the fitting rooms and checkout to limit any contact or exposure to others. Overall, we've been very pleased with how things are going in the stores.

And I want to give a second to shout out to our store managers, assistant managers, key holders, senior leadership management and the store operations team who are all making this happen. Now let me give you a little more color on how it's going in the stores.

As of June 2, we have reopened 201 stores across the country that are fully open and operational. Most of the stores open today are throughout the middle and southern regions of the country. Some states have just reopened or have yet to reopen. And they account for some of our biggest markets and are located primarily along the coast.

On April 28, we began our reopening with three stores in Murray, Utah; Columbia, South Carolina, and Sioux Falls, South Dakota, plus three stores opened for curbside pickup only, which were in Texas. That is how we ended the first quarter. We then followed up with 14 stores on May 5, another 33, 58 and 39 over the next three weeks.

And just this Tuesday opens another 54. We expect to have 100% of our stores open for business by the end of June, and we are well on the way. The important question you'll want to know is how are our stores performing? We are making great progress.

At a high level, initial openings performed at minus 70% to minus 80% comp, then minus 50% to 60% and today we are tracking at approximately minus 40%. But we'll continue to see progress as more consumers enter into the public space. Our best day thus far has been a comp for stores at minus 31%.

But pockets such as our outlets have a days of plus comp performance over last year. For DXL, the good news is the majority of our stores are freestanding and no store is in a traditional mall setting. We are adapting and evolving our customer service and store operational practices to thrive in this new environment.

The environment to which I refer at this time includes limited store hours of 12 to 6 Monday through Saturday and 12 to 5 on Sunday. Direct fulfillment by stores is materially higher than has ever been in our history and where BOPUS has turned to BOPAC, buy online, pickup at curbside.

We expect it will become a multiple of what BOPUS was in penetration. Like many other retailers, our business in direct and specifically our dxl.com business has been strong and performed well over the past several months.

Traffic to our website has been volatile, but continually growing and conversion has been very strong and exponentially greater than ever in our history. It will be very interesting to learn where it settles in as we begin to learn and return to what is the new normal.

We've been encouraged as our sales trends have accelerated, as warmer weather settles in across the country.

The Web business could not substitute for 221 stores closed, but the growth rate on the dxl.com web site initially tripled from what it was in the low double-digit growth year-to-date is now over 30%, and for the quarter-to-date Q2 period, we are experiencing accelerated year-over-year growth of over 70%.

Now let me shift gears a bit and give you a few comments on inventory status and our merchandising strategy during the pandemic. As I mentioned, we took an early and aggressive stance on inventories through a combination of order cancellations and significantly reduced receipt plans.

And we instituted a heightened promotional pace to convert inventory to sales. The accelerated promotional efforts were particularly oriented around our spring seasonal goods. We have created more value and a reason for him to shop with us by driving deep discounts.

The good news is we have experienced meaningful new customer growth in our direct channel, providing an opportunity to expand our loyal customer base. With regards to our assortment highlights, we experienced a considerable shift in buying behavior, with strength in our core and basic categories such as active and loungewear.

We expect the current shift in buying behaviors, including what they are buying will for the -- last for a long time and perhaps forever, as the concept of work from home is likely here to stay. Our clearance inventory represented 11.5% of our total inventory as compared to 10.6% a year-ago.

As we look beyond COVID-19, our forward long-term merchandising view is evolving and we see an opportunity to narrow our assortment, increased product depth, which will result in a greater level of brand pruning across categories.

We are taking a test and learn approach as we need to be sure we can offer compelling assortment with enough depth and sizes to meet our broad customer base. More on this topic as the year progresses.

I also want to specifically cover marketing, but in reality, it is really not marketing per se, but the consumer who has evolved overnight and how we engage with him as well. Our belief is that the pandemic has meaningfully and permanently perhaps shifted the consumer and customer behavior in many ways.

What was it years in terms of evolution has become months in terms of change and revolution. The digital landscape and the ensuing growth have been accelerated in a multiple of years, and marketing to consumers will forever be different. For the long-term, our thesis remains the same.

Talk to cohorts, archetypes and consumers overall, but in more personalized ways and win by being more relevant and more efficient. In a post-COVID world, understanding the customer and their preferences and then marketing in a way that's relevant to them is going to be much more important and more important than ever.

And we'll continue to build infrastructure to be able to achieve this. As customer buying preferences change due to COVID-19, we've already evolved some of our approaches and to ensure we are not only more relevant in the moment, but as we continue to build a long-term relationship with our customer base.

Let me give you a few specifics in both how we have evolved marketing and how we are driving productivity. During this time, we have marketed to our customer differently and tested many new ideas.

We have prioritized marketing of merchandise that customers are more likely to buy, while working and being remote, marketing active, loungewear and casual over tailored clothing and shoulder garments. We have changed our web site functionality with agility to build curbside pickup fulfillment for customer orders and created happy hour-type events.

We have powered our app with exclusive promotions, redesigned the web experience, leveraging the highest click stream and conversion, giving you what you want at the top of the funnel.

In terms of productivity of marketing and expense, we have shifted spend even further away from mass media to more targeted digital only channels and have ultimately leveraged our customer file to grow our web business.

In terms of expenses, we've renegotiated many agreements with media, partners and vendors in both terms of the pure cost and the SLA. In the short-term, we have been very focused on fulfilling the customer's needs through the mechanisms and platforms they are gravitating toward, along with balancing the financial outcome for the business.

And lastly, I want to give you an update on our wholesale business. The growth of our wholesale business continues to be a key initiative in fiscal 2020, led by our business with Amazon Essentials, which contributed $2 million of sales in the first quarter.

This business, the Amazon Essentials program, was not immune to the impact of the virus and Amazon shifted to essential supplies and so did the customer in what they ordered. That being said, the business has also come back very strong in the past couple of weeks, demand has been the highest of all year, even pre-COVID levels.

With our sourcing expertise and factory relations in place, we've also launched a new wholesale line of business in the design and sourcing of protective masks with sales beginning in the fiscal second quarter and already in the second quarter of fiscal 2020 we have received commitments to the sourcing and selling of masks to Fortune 100 companies, with nearly 2.5 million masks ordered so far.

I will now turn it over to Peter for an update on the financials.

Peter?.

Thank you, Harvey, and good morning, everyone. I'd like to provide you all with a summary of our first quarter financial results and then talk a little bit about our financial position going into the second quarter.

As Harvey mentioned, our primary focus this quarter has revolved around preservation of liquidity and developing a path to the other side of the pandemic.

The actions that we've taken have been decisive and effective, and we feel confident that we will emerge from this crisis, well-positioned to continue serving big and tall guys all across the country. With that said, let's start with sales and margin.

Total sales for the first quarter decreased 49.3% to $57.2 million, down from $113 million in the first quarter of last year. Obviously, store closures contributed to the majority of the decline, but we were pleased that our direct business performed well and made up for some of the loss in store sales.

Gross margin rate, inclusive of occupancy costs was 23.1% as compared to a gross margin rate of 43.7% for the first quarter of fiscal 2019. Our gross margin rate declined 13.3% from the deleveraging and occupancy costs against a much lower sales base and a decrease of 7.3% in merchandise margins.

We were more promotional this quarter to encourage customers to shop online and to mitigate a buildup of seasonal inventory. This increased promotional posture is the primary reason for the decline in merchandise margins. We also took a $700,000 charge this quarter to increase our inventory reserves as a result of more aggressive clearance strategies.

Again, our intention is to move through as much of our spring product as possible, to be in a clean position at the end of Q2 to start receiving fall products. Now let me move on to selling, general and administrative expenses. For the first quarter of fiscal 2020, SG&A expense was $32.1 million versus the prior year first quarter at $44.6 million.

This represents a 28% decline year-over-year. This decrease in expenses was primarily driven by furloughs of both our store associates and certain corporate associates, as well as several measures taken to reduce operating expenses, including marketing, corporate payroll and other discretionary spending.

On a percent to sales basis, SG&A costs were 56.1% as compared to 39.5% for the first quarter of fiscal 2019. We are continuing to assess and rationalize our entire SG&A cost structure as we start to reopen our stores. Across both our corporate office and stores, we plan to bring back staff as we reopen and business comes back.

But we'll look to optimize store hours and staffing models based on customer demand. We expect overall store payroll costs to trend lower than historical levels.

The disruption to our store business model caused by COVID-19 and the uncertainty surrounding its continuing impact triggered an asset impairment analysis on our long lived assets as of quarter end.

Our recoverability analysis used projections that were based on multiple probability weighted discounted cash flow scenarios, assuming that our stores will gradually reopen throughout the second quarter of fiscal 2020. But that consumer retail demand will remain substantially curtailed for a period of time.

As a result, we recorded a non-cash impairment charge of $16.3 million for the first quarter of fiscal 2020.

The impairment charge included $12.5 million for the write down of certain right of use assets related to leases or carrying values exceeded fair values in $3.8 million for the write down of property and equipment related to stores where the carrying values exceeded fair values.

Adjusted EBITDA, which excludes CEO transition costs and impairment of assets, was negative $18.9 million for the first quarter, compared to $4.8 million in the first quarter of fiscal 2019.

Net loss for the quarter was $41.7 million or $0.82 per diluted share, compared with a net loss of $3.1 million or $0.06 per diluted share for the first quarter of fiscal 2019.

On a non-GAAP basis, adjusted net loss for the first quarter was $0.37 per diluted share as compared to an adjusted net loss of $0.04 per diluted share for the first quarter of fiscal 2019. Now I'd like to move on to cash flow in the balance sheet. As I mentioned, we took a number of steps this quarter to preserve and maximize our liquidity.

Our free cash flow for the quarter actually improved to a use of $18.4 million as compared to a use of $20.2 million for the first quarter of fiscal 2019. We also improved our excess availability under our credit facility by amending the facility in April 2020.

Among other things, we increased our borrowing base by delaying the step down in the FILO advance rate until December 2020. We also lowered the loan cap on our revolver from 12.5% to 10%, and we modified the agreement to allow the company the ability to enter into promissory notes with merchandise vendors up to an aggregate of $15 million.

Interest rates under the revolving facility in the FILO loan were increased by 150 basis points. At the end of the first quarter of fiscal 2020, we had a cash balance of $26.1 million, total debt of $96.5 million and remaining availability under our credit facility of $16.8 million.

Our inventory balance decreased approximately $4 million in the first quarter to $108.3 million, as compared to $112.3 million at May 4, 2019. With respect to the remainder of fiscal 2020, we expect to be responsive to business changes, but expect that our fall inventory buys will be below fiscal 2019 levels.

Our objective is to maintain a healthy inventory position, which will include narrowing our assortment, while also continuing to manage clearance levels. At May 2, 2020, our clearance inventory represented 11.5% of our total inventory as compared to 10.6% at May 4, 2019.

As we continue to navigate through this pandemic, we are taking a conservative approach to financial planning with a modest improvement in sales trends as stores reopen and our customer becomes more comfortable with returning to our stores.

We believe that the steps we've taken this past quarter to preserve liquidity and maintain our financial flexibility represent the first steps on our way to a recovery.

We feel confident that we have a path to navigate through the next 12 months and as we move further along in fiscal 2020, we will have a more clear picture of what we can expect in fiscal 2021 and beyond. With that, I would like to turn it back over to Harvey for some closing thoughts..

As I close up the call today, I want to quickly thank the Board, our partners and our investors, who have provided support and insight along the way as we steer through the business challenges.

Second and more importantly, although I've already discussed the pandemic, I also want to address the disturbing issue of social injustice that we are facing as a nation and in which we have been reminded in recent days. The extent of how volatile the times have become is hard to believe.

The issue of racial equality and social injustice, which have been raised in the nation's conscience, underlines the seriousness of this issue, which impacted us all as a nation. At DXL, we are committed to inclusion, acceptance and support in our business. As a business, we have a diversity and inclusion initiative oriented around unconscious bias.

But we need to continue to ask ourselves as a company, are we doing enough? Are we committed enough? As a company, we are committed to address the challenges of bias and injustice. And together we need to overcome these issues.

Inside DXL, we will ask the question again, but also commit to push harder in the program we have for diversity and inclusion for associates and our guests. And now we will take questions..

Thank you. [Operator Instructions] Our first question comes from Eric Beder with SCC Research. Please go ahead..

Good morning..

Good morning..

Thank you for the color.

Going forward, what would you be thinking about in terms of the mix between kind of private label and branded product? And how do you kind of look upon that as a marketing asset or non-asset here?.

Yes, it's a great question. This is Harvey. Hey. Basically, we believe that the private label product is still critically important and the penetration in our mix will not materially change.

That being said, we clearly have continued to see an escalation in the penetration of the branded goods and the collections we're offering and the customers desire to buy more of those. So the reality is we will continue to shift and most appropriately respond to the trends of the business.

But I think that what we've seen in our recent, let's say, 18 months is that the shifts are small and the magnitude has ebbed and flowed.

Our private label certainly has really elevated in some respects in certain key categories in the COVID in the first quarter issues that we've experienced and that makes what -- would make obvious sense, things like underwear, basic loungewear, active wear and things of that nature.

And then the flipside is some of our non-branded items continue to decline, be it tailored clothing or what have you, and you can see those same trends in the branded part of our mix, but the branded part of our mix has less penetration in brands, i.e. the shoulder garments and things of that nature..

Right. When you look at this new world, obviously online has become -- it was always important to you, it's become even more important to you.

How is the function of what this -- a, how many stores you need and what is the function of the store going to change going forward?.

The reality is we continue to believe that it's not for us to determine the way consumers shop. And the reality is consumers want to have experiences in stores.

I think it's quite interesting to understand and see the different retailers experiences right now as consumers demonstrate in some businesses a desire to get back in the stores and have experiences. And so our belief continues to be that our store experience is critically important to the mix.

But the question you really are asking, I think, is how will that change in terms of the store experience, not just for the customer, but in terms of really the mix. And what we've seen and we've talked about pretty directly is the level of our stores capacity to create fulfillment.

Our BOPAC program, which has shifted from our BOPUS program, although the reality is the percentage of consumers coming to us to buy online and pick up a curb is growing. In the scheme of life, we don't know that it'll be the most meaningful part. And clearly, the other end of the continuum is the level of fulfillment our stores can do.

We kept 30 stores open approximately during the pandemic so far until we started to reopen all stores and those stores were meaningfully important for fulfillment. They're really like 30 mini warehouses.

And our ability to leverage our assortment now across the chain is exposing the customer to a much greater breadth of offer and giving us much greater fluidity and the ability to deliver much quicker to customers, because basically you have a last mile store in every city as opposed to a warehouse in Canton.

And it's giving us a greater ability to provide breadth of offer that is well beyond what is continuing in the DC. Probably equally important, if not more so, is that last mile and the ability to quickly get it to our customer or let them choose to come into the store, whether it's curbside or in the store itself.

So the store function, we believe, is critically important and part of the experience not just for fulfillment, but for the customer. And in reality, the fulfillment element has really ramped in the period that we just experienced..

Right. And last question I see now you are selling masks also retail wise.

Do you plan on selling those in the stores? And do you think that -- how is that business doing?.

You know, we initially pivoted our alterations in tailoring department literally to make masks for the community. And our initial intent was to do that as a service to the community and literally give them out for free because we thought we had the capacity to do that. Through that process, it's pretty incredible.

The development work we did around masks, the attempt to get it through FDA, the recognition that N95 was too big a leap for us to get too quickly. But in that process, we developed a triple layer mask that actually was vapor -- capable of blocking the micron element within that inner liner to actually provide a level of protection.

And so we've gone out. We've actually now sold governmental offered -- governmental entities, the masks to literally state governments. We've sold Fortune 100 companies and we're bringing it online. We've been chasing it pretty hard in spite of the fact that we are ahead of it.

We've been chasing it pretty hard and it's sold out the first delivery in our online business. We are also going to put it, as you ask in our stores and let the customer tell us how important it is.

What we believed it initially, though, was more of a commendation to support the communities and the reality of the situation we all face has turned to this some level of the business model. We -- in this case particularly, we haven't reached for the brass ring in margin.

What we're really trying to do is continue to provide a service to both customers and businesses and we'll see how it ebbs and flows, if you will. And our belief is that it will be meaningful in the stores.

Our largest part of the delivery is yet ahead of us in terms of what will really ramp in terms of unit that will be in the store at the end of June. And when that happens, they will go in stores and we will let the customer tell us how important it is to the future of the business.

We never consider it to be game changing for us, but in reality it is -- it will be more than a blip on the radar screen. With 2.5 million masks sold, we have orders that are potentially pending for another 2.5 million.

And the customer will book quickly on what we're bringing into the -- to the business in terms of online and more importantly, in stores and we'll see how fast it ramps in a more meaningful way..

Great. Good luck for the rest of the year..

Thanks a lot for the question..

Thank you. Our next question will come from Glenn Krevlin. Please go ahead..

Good morning. A couple of different questions. The first is coming into the year, Harvey, you had a lot of initiatives on the direct-to-consumer side to get some software implementation, some different tests going on.

Where are we on that just in terms of is that project continued? You’ve tried certain things this quarter, maybe you can give us an update there. That's my first one.

My second one is on the Amazon wholesale program has it been expanded in any way in terms of number of items, SKUs, inventory? And then lastly, I would like some sense of lease liabilities that expire over the next year or two? And how you're thinking about the real estate portfolio and the expirations that you have coming up?.

Yes, I can take all three of those and then I'll turn it over to Peter, if he has any additional comments. On the high level marketing initiatives, there is no question that the direction we embarked on really throughout 2019 and we got traction in 2019 fourth quarter and alluded to acceleration at some level in February are still the priorities.

Whether it's the CRM system itself, whether it be the platform for personalization and talking to customers uniquely and relative to what they want, which we referenced in the call itself. Whether it would be the digital marketing element and reducing TV.

I'm sure you probably didn't miss it, although you may have, because not everyone might not be tracking the business at the level that we are. But we were not on the draft this year, and the draft still was a pretty interesting media for people to watch. But TV and blunt level marketing, given the pandemic, didn't make sense to us.

And we've alluded to pulling back on TV and really applying our marketing expense built around our platform to drive the greatest productivity, but more importantly, be the most relevant to consumers.

In the pandemic, what we've seen is consumers searching and much more aggressively for specific things and the ability to focus what we market around what consumers want is most capable digitally. You can see that in our email program. You can see that in our loyalty program. You can see that in our communication of what we actually are selling.

So the answer is emphatically, yes. We have -- that being said, there are elements which have slowed down based on staff not being completely available and dynamics of companies and partners we are in business with, the dynamics have in some cases impacted us, but the direction is no different.

In -- the reality is, I think some of the things you'll see come to life in a greater way throughout the balance of this year. But in some cases have been delayed for sure in the first quarter and more than likely will move into 2021. The second thing you asked about is Amazon. And the Amazon program, it's actually remarkable.

What was published, and I'm sure everyone has read about was the degree to which Amazon actually had a requirement driven by need to pivot their entire business to essential services, things like masks and sanitizers.

And in reality, because of our partnership with them and our ability to manage our business, we can see real time, very much the consumer's shift in what they were searching for. And our business slowed down at a clip that was probably at one point, one-third of what it was for a moment in time.

Interestingly enough, it's now returned in the last three weeks and the level of acceleration has been remarkable to the point where we're now exceeding each week in the last three weeks, the highest level of demand for Amazon Essentials products on the Amazon site in the spring season for our program.

And our program, as we've already communicated, we'll continue to expand with the next level of good threads being part of the program that we're moving forward with.

So in reality, we see an expansion that is yet to happen in terms of SKUs, but the partnership and the belief in the consumer oriented around Amazon in addition to our core business is very much there. Now, that being said, I did also talk about in reference that we are very close to another major retail account.

And as you might imagine, I wouldn't say that completely fell apart, but that came to a brick wall quickly. And really, though, the end of that process and I don't know, given the dynamics of other retailers and the entity we're talking to, if that will be resurrected and when it will be resurrected. So we feel very good about our Amazon business.

We may or may not be able to expand it in the way we're thinking with another retail account, at least for the immediate time being we won't.

And then the flipside is the growing mask business, it's been remarkable that we've had entities buying a million masks at a clip or 250,000 at a clip, and we have current discussions that is part of our wholesale business that are being potentially extended, driven by the expertise and our global sourcing initiative that as we now are starting to work with Fortune 100 companies and they're actually seeing both our Amazon business and our masks business and our ability to build products at a remarkable level of quality, but equally so deliver it really quickly, there may be new opportunity for wholesale that we didn't think about before.

And last but not least in terms of leases in our store count and expect explorations, what we're continuing to do, which I have to believe any retailer worth their weight in salt is doing, is looking at every store and determining how that store is performing.

I'm sure you recall remarks where we have said that the great majority of our stores, more than likely, potentially more than others, are four-wall profitable. And the challenge for us as we've evolved the chain and converted in place casual male stores, we still have a number of stores that are smaller in footprint.

And what we're looking at is the question asked earlier by Eric is, does the store count need to be what it is? And given the size of stores with natural lease expirations, would we and should we reduce our store count to make those stores more aligned with the go forward platform.

And while we have an answer that definitive today, it's certainly a consideration that we would reduce our store footprint driving -- being driven by those smaller stores that don't fit the go forward platform and prototype, but yet are four-wall productive.

And with the need to drive more online, it's a logical conclusion that at some level we reduce our footprint. The question of how much is TBD..

Just one follow-up.

So you're fully on the new CRM platform, Harvey, the one that I think you talked about last year being implemented?.

No, we are not fully on it. Not only we are not fully on it, we are using it. But what has been the biggest setback for us in the marketing pivot to the number of segments that we could go after and we have identified and the actual implementation of marketing against those segments. So I'll give you a specific, for instance.

It wouldn't be remarkable to believe that our Ralph Lauren business and the specific collections part of the business and the specific sportswear that -- what I might define as a fashion, has not been as strong as the flipside of basic T-shirts from Ralph Lauren or for that matter, loungewear and accessories.

And so our ability to market based on those dynamics has been waylaid because we're not marketing fashion clothing right now or we haven't been in the Q1 wear underwear and T-shirts and literally loungewear and active wear have been critically more important.

And so as a result of that, we haven’t been marketing to those segments at that level because not every business had relevance in the last 90 days. And as a result of that, we don't have the learning that we had hoped to have coming out of Q1, which we talked about really at the end of Q4..

Right. Thank you..

Ladies and gentlemen, that does conclude today's question-and-answer session, as well as today's conference call. Thank you for your participation. You may now disconnect and have a wonderful day..