Ladies and gentlemen, thank you for standing by and welcome to The Children’s Place First Quarter 2020 Earnings Conference Call. This call is being recorded. [Operator Instructions] It is now my pleasure to turn the floor over to Anthony Attardo, Director of Investor Relations to begin..

Good morning and welcome to The Children’s Place conference call. On the call today are Jane Elfers, President and Chief Executive Officer; and Mike Scarpa, Chief Operating Officer and Chief Financial Officer.

The Children’s Place issued a press release earlier this morning and copies of the release and presentation materials for today’s call have been posted on the Investor Relations section of the company’s website. After the speakers’ remarks, there will be a question-and-answer session.

Before we begin, I would like to remind participants that any forward-looking statements made today are subject to the Safe Harbor statements found in this morning’s press release as well as the company’s SEC filings, including the Risk Factors section in the company’s Annual Report on Form 10-K for its most recent fiscal year.

These forward-looking statements involve risks and uncertainties that could cause actual results to differ materially. The company undertakes no obligation to publicly release any revisions to these forward-looking statements to reflect events or circumstances after the date hereof.

After the prepared remarks we will open the call up to your questions. We ask that each of you limit yourself to one question so that everyone will have an opportunity. And with that, I would like to turn the call over to Jane Elfers..

Thank you, Anthony and good morning everyone. I would like to start out by thanking the thousands of our associates who have done a remarkable job these past few months under very difficult circumstances.

They have demonstrated the resilience of this organization by keeping our business running at a high level and providing millions of growing kids across the country with the clothes they need.

I want to say a special thank you to our frontline distribution center and store associates who have been the heroes of our company throughout this crisis, working hard every day to ensure that our facilities continue to operate safely and effectively and that families all over North America continue to receive the essential clothes they need for their growing children.

Moving on to current business, we are not providing guidance, but we want to bring you up to date on current business. As demand for our essential children’s clothing continues to surge, our omni-channel advantages are clear.

Quarter-to-date, our consolidated sales are running a positive low-double digits with online demand up 300%, while approximately 95% of our stores remain closed.

We have brought back 88% of our furloughed store associates with the remaining furloughed store associates expected to return by July 1 when we are planning to have the majority of our stores open. Moving on to our strategic initiatives.

Although we are facing a period of uncertainty regarding the future impact of the COVID-19 pandemic, the Children’s Place is moving swiftly and decisively to proactively address these challenges. How we emerge from this crisis depends on the actions we take now.

In order to position the company for continued success, we are balancing near-term priorities necessary to preserve our financial flexibility, including working to protect our employees and customers, flexing our supply chain to address demand disruption, and managing cash and liquidity, while continuing to focus on transformational strategies, including allocating resources to drive digital sales and significantly accelerating our fleet optimization initiative.

Building new advantages during times of uncertainty requires skilled leadership and strong resolve. For companies that are well prepared, successfully executing transformational moves during difficult times creates opportunities for long-term competitive advantages through market share gains.

We believe that our longstanding transformation strategy has prepared us well for these uncertain times. The pre-existing conditions in our industry, the shift to digital and the consolidation of brick-and-mortar, have been in place for some time. However, due to the pandemic, they are both likely to experience a significant acceleration.

Fortunately, we have been focused on these two issues for the better part of the last decade. Due to the pandemic, consumers all across America have been forced to shop online, many for the first time with positive results.

We anticipate that the lingering impact of COVID-19 will continue to accelerate the shift to digital, putting enormous pressure on the already-stressed brick-and-mortar channel, resulting in accelerated store closures.

Further exacerbating this issue are the forced bankruptcies of several weaker retailers that were unable to handle the demand shock to their balance sheets caused by the pandemic. Retail bankruptcies almost always come with outsized and accelerated store closures or in many cases full store liquidations.

When you combine the accelerated shift to digital, which we believe will continue over the long-term with the large number of store closures anticipated to occur over the next few years, we believe that significant market share consolidation opportunities exist for retailers with stronger balance sheets, developed omni capabilities, and recession proof assortments.

Before we discuss our digital transformation and fleet optimization initiatives, let’s address our number one strategic priority, superior product. Our product consistently resonates with our customers, and demand for our product remains very strong. We are clearly an essential provider of children’s apparel in the U.S.

Our market share position, our consistent product, and our strong value proposition give us confidence that our brand can thrive in any type of economic environment.

During the ‘08 and ‘09 financial crisis, our company achieved low single-digit comps for the combined period as compared to the balance of children’s sales, which were down for that same period.

Moving on to digital transformation, our strategic decision 3 years ago to invest $50 million to accelerate our digital transformation caught some by surprise. They wondered why we didn’t spread the spend out over a longer period of time. The foresight of that decision cannot be underestimated.

Not only have those investments allowed us to achieve one of the highest digital penetrations in the industry at 31% of total revenue for fiscal 2019, they have allowed us to continue to operate at a high level during this current crisis.

Without that accelerated digital investment, we would not have the sophisticated omni capabilities needed to continue to operate during this crisis. We implemented ship-from-store capabilities across our entire fleet 2 years ago, which is a significant competitive advantage. Since April, we have had over 85% of our U.S.

fleet fulfilling ship-from-store orders, which has more than doubled our daily DC shipping capacity, enabling us to continue to promote our brand and fulfill our surging online demand. If we had not made these digital investments when we did, we would be losing significant market share and brand loyalty at a critical time.

Without these digital capabilities, our stores and our distribution center would be filled to capacity with trapped spring and summer merchandise.

Instead, we are able to fulfill our customers’ strong demand for essential children’s clothing, further consolidate market share, and earn mom’s loyalty as she contemplates shopping for next season’s wardrobe.

And importantly, due to our ability to fulfill our strong online demand, we are targeting to have zero pack and hold liability coming out of the second quarter.

Not having the burden of pack and hold on our balance sheet allows us to better utilize our capital, take advantage of what we believe will be an advantageous AUC environment in 2021, and provide our vendor partners with continued order flow.

Within our online business, our key digital metrics, UPTs, ADS, and conversions are all at record levels, and further supporting our digital growth during this difficult time are two key factors.

First has been the migration of our store-only shoppers to omni-channel shoppers at 4x the pre-pandemic rate, with 50% of our file currently e-comm or omni-channel customers versus 37% last year. Our omni-channel customers spend nearly 3x that of our retail-only customers.

Second, we have increased our new digital customer file by approximately 250% since we closed our stores in March, which we believe will allow us to emerge from this crisis with greater online share due to increased customer awareness of our e-commerce channel.

Driven by our accelerated investments, our superior product offering, our strong value proposition, and our digitally savvy core millennial customer, the shift to digital was already well underway at TCP, but since the onset of the pandemic, the digital shift has significantly accelerated and we believe it will continue to do so post-pandemic.

Moving on to fleet optimization, fleet optimization has been a key focus at The Children’s Place for the better part of the last decade.

Over the past several years, Mike and our store development team have strategically positioned the company for optimum flexibility in our lease terms, culminating in lease actions that impact approximately 70% of our fleet through fiscal 2021.

This level of fleet flexibility on a fleet of our size is unique and because of it we can now significantly accelerate store closures without financial penalty. Over the next 20 months, we are targeting to close an additional 300 stores dramatically reducing our reliance on our brick-and-mortar channel.

We anticipate that entering 2022 following the 300 closures, our mall-based portfolio will represent less than 25% of our total revenue. While the challenges that lie ahead are many and visibility is limited, we are moving forward with urgency and focus guided by the pillars of our longstanding transformation strategy.

We believe that we were ahead of the digital shift due to our accelerated digital investments and will work to stay ahead due to our increased focus on personalization.

We were ahead of the brick-and-mortar shift due to our fleet optimization strategy and we will work to stay ahead of it through a significant downsizing of our fleet, while remaining in the best, most productive locations with a significantly reduced reliance on malls and continued flexibility in our lease terms.

We have a strong brand that thrives in good times as well as bad. Our business is supported by superior product with great value that strongly resonates with our digitally savvy millennial core customer who is buying our product for her Gen-Z children who are growing up wearing the TCP brand.

We believe we are well-positioned to capitalize on the significant market share shifts that have already begun and will continue to accelerate for the next several years. And finally, our long tenured management team is focused on winning for our associates, our customers and our shareholders. And now, I will turn it over to Mike..

one, in line with prudent accounting practice, we recorded an inventory provision of $63 million related to the adverse business disruption resulting from the COVID-19 pandemic, including the store closures.

Based on our inventory position at the end of the first quarter, we have earmarked over 3 million units with an inventory value of approximately $11 million for donation to charity, to support families in need.

For the balance of our inventory position, we have recorded an inventory provision of $52 million to write down our inventory to its net realizable value, inclusive of anticipated fulfillment costs, which are expected to be significant, given the higher level of ship from store activities taking place to support our accelerating online demand.

By opening up our store inventory to meet our e-commerce demand during this period, it positions us to grow market share and meet our moms need for essential clothing, as well as ensure we are in an advantageous inventory position for our upcoming back-to-school season. Additionally, the company anticipates zero pack and hold, exiting Q2.

Two, an occupancy charge of approximately $23 million, related to locations closed due to COVID-19. It is important to note, that we suspended rent payments beginning in April, but for accounting purposes, we have accrued our full rent expense. This provision represents the rent expense for the period when our stores were closed in the first quarter.

And three, incremental expenses of approximately $2 million, primarily for incentive pay and personal protective equipment for our distribution center associates.

Adjusted SG&A, adjusted SG&A was approximately $88 million versus $127 million last year and de-leveraged 380 basis points to 34.6% of net sales, primarily as a result of the de-leverage of fixed expenses resulting from the decline in sales as a result of store closures, partially offset by a reduction in operating expenses, associated with actions taken in response to the COVID-19 pandemic.

Adjusted SG&A excludes approximately $10 million in certain items, which the company believes are not reflective of the performance of its core business, primarily related to – and approximately $6 million charge related to the COVID-19 pandemic, including payroll and benefits for our in-store employees during the period stores were closed due to the pandemic, net of a tax benefit related to the CARES Act, customer receivables and personal protective equipment for our store associates.

And prior to COVID-19, we incurred approximately $3 million of restructuring costs, primarily related to severance costs for corporate associates. Adjusted operating income, adjusted operating loss for the quarter was $37.5 million versus operating income of $6.6 million last year and de-leveraged 1,630 basis points to a negative 14.7% of sales.

Adjusted operating loss also excludes approximately $37 million in asset impairment charges, including the right of use assets recorded in connection with the adoption of the new lease accounting standards. Tax rate, our adjusted tax rate was a benefit of 27.4% versus a negative 17.8% last year.

Moving onto the balance sheet, our cash and short-term investments for the quarter were $72 million as compared to $68 million at year-end. We ended the quarter with $235 million outstanding on our $360 million revolving credit facility, compared to $171 million outstanding on our $325 million revolving credit facility at fiscal year-end 2019.

The increase reflects funding to support operations and seasonal working capital needs. We ended the quarter with inventories down approximately 1.5%, inclusive of the $63 million inventory reserve related to the COVID-19 pandemic. We are targeting to end the second quarter with clean carryover inventory and zero pack and hold liability.

The advantages of not having to burden the pack and hold inventory on our balance sheet includes better utilization of our capital, the ability to take advantage of what we believe will be an advantageous AUC environment in 2021, and continuing to provide our vendor partners with continued order flow.

Moving on to cash flow and liquidity, we used approximately $40 million in cash flow from operations in the first quarter. Capital expenditures were approximately $6 million. We repurchased approximately $15 million of stock in the quarter, prior to suspending the capital return program.

We have undertaken several actions in an effort to preserve liquidity in fiscal 2020 as a result of the COVID-19 pandemic.

The notable actions include, executing a substantial reduction in deferral of all non-essential expenses and carefully scrutinizing all capital expenditures, with capital now planned at approximately $20 million in fiscal 2020 versus approximately $58 million in fiscal 2019.

We remain vigilant on inventory management and forward receipts, with the intention to better balance inventory to demand. We have collaborated with vendor partners to extend payment terms. We have suspended rent payments on leases for all our U.S.

and Canadian stores, and we are currently in active negotiations with landlords, regarding our store leases. The company continues to evaluate its options on store lease events occurring through the end of fiscal 2021, which impacts approximately 70% of our current store fleet.

We finalized an amendment to our revolving credit facility on April 24, which increased borrowing capacity from $325 million to $360 million for a period of 1 year.

We have temporarily suspended our company’s capital return program, inclusive of share repurchases and dividends, and we instituted temporary furloughs or pay reductions for a majority of our corporate staff, all store and field associates were furloughed and we have implemented temporary Executive and Board pay cuts.

As of June 9, the company’s liquidity position has improved $24 million from the end of Q1 to $184 million, as a result of positive cash generation and an increase in our borrowing collateral.

The company believes its ongoing actions, coupled with continued strength in its digital business, will provide liquidity to help support the company in navigating through this unprecedented level of uncertainty and disruption.

I’ll now provide a brief update on our store activity in the quarter, along with planned actions we are taking to accelerate our fleet optimization initiative. We closed four locations in the quarter, which brings our total store closures to 275 since our fleet optimization initiative was announced in 2013.

We ended Q1 with 920 locations, with 62% in malls and 38% in non-malls, with 83% of our mall locations in A or B centers.

Moving on to our accelerated store closing plan, we have often discussed the unique flexibility we have, as a result of our decade long fleet optimization strategy, which has resulted in an average lease life of approximately two years, with approximately 70% of our stores having a lease event by year-end fiscal 2021, which arms us with a meaningful flexibility to further optimize our store fleet.

As e-commerce demand has accelerated, partly as a result of COVID-19, we have significantly increased our planned store closures and are now targeting to close approximately 300 additional store locations by year-end fiscal 2021.

Our forecast now targets closing approximately 200 store locations in fiscal 2020, and approximately 100 store locations in fiscal 2021, resulting in approximately 625 store locations at year-end 2021. Historically, we’ve realized an approximate 20% transfer rate in sales from closed stores.

By the end of fiscal 2021, we expect to greatly reduce our reliance on our brick-and-mortar channel, resulting in a smaller more profitable store footprint and leaving our mall-based portfolio, accounting for less than 25% of revenue entering fiscal year 2022.

Outlook, due to the continued level of uncertainty in the current business environment, we are not providing a financial outlook for fiscal year 2020. At this point, we will open the call to your questions..

Thank you [Operator Instructions] Our first question comes from the line of Adrienne Yih of Barclays..

Good morning, everybody..

Hi..

Good morning..

Hi, great. Glad everybody is doing well. So Jane, thanks for all the color, very helpful. My last comment was, 2021, much-much smaller store base.

If we think about the business, say, 3 years from now or even 5 years, a little bit of a longer term, what does the kind of e-commerce-to-store footprint look like? Does it really matter, because you’re becoming so omni, and can you give us a quick update on the Gymboree launch and how that’s faring? Thank you very much..

Sure. As far as Gymboree, we are really pleased with how Gymboree launched. We had a really great customer response out of the box and from what she was telling us on our social media channels, we really hit the nail on the head as far as the product aesthetic.

Unfortunately, as we have discussed before, we launched with predominantly Easter products during the crisis, so we only had about four weeks before the lockdown began, but we continue to be very pleased with the summer lines that we have launched over the past couple of months, and the customer feedback remains very positive on the groups that we have launched.

They have the same call-outs that they had from the beginning. They are asking us to produce more boy products. They are asking us for more underwear, and specifically they want pajamas. JIMMY’Z [ph] was a big category for Gymboree in the heyday.

And all of those three categories are in the works for fall, and so we will see more of that throughout the back half of the year.

And as we did for TCP products, we went into the back half and right-sized the year – back year’s supply with projected demand and made some outsized inventory reductions in the categories that we think will probably pose some of the biggest issues, like the dressy categories.

We are being conservative for the back half of the year, but overall extraordinarily pleased, really kudos to our design team. They really did a phenomenal job, really hitting like I said, the nail on the head.

And then as far as 3 or 5 years out, it’s hard to tell, but I would tell you that if someone had told me that I was going to have all my stores closed and I would be double-digit comping consolidated, I’m not sure even though I am a pretty big advocate of our digital future, I don’t even know if I would have believed that.

So I think, through this crisis, we have really seen what we can do. Digitally, I think we are obviously strongly on offense. Now, we have a need-based product. We have a recession-proof product.

We have our digital investments that have set us up, to have the kind of success we are having right now, and it really allows us to move aggressively to right size our store portfolio. So, we are looking at, as Mike said, 625 approximately stores in the next – in 20 months to have that, and then we will take it from there.

I certainly think stores will be an important part of our business going forward, as I think an omni-channel model is important and we have seen that. But we are certainly – as I said, taking an aggressive stand to pair our store base now, now that we can see, that we can continue to grow revenue even with our stores closed..

Your next question comes from the line of Tiffany Kanaga of Deutsche Bank..

Hi. Thanks for taking our questions. The quarter-to-date consolidated sales trends were helpful.

Would you talk specifically to how your reopened stores have performed, if you can give a comp or some incremental color for just that group, even though I know it’s a small cohort? And would you break down how much Gymboree is contributing to the digital growth, and what the core Children’s Place online growth looks like?.

Sure. As we said, we have 61 stores open and they are doing 97% of last year’s productivity – 97% of last year’s sales, so we are very pleased with that. As far as Gymboree, we are not breaking it out, but it’s a much-much smaller piece of the business digitally..

Your next question comes – I am sorry..

Just to add some color to that also in terms of the stores that are open. We are seeing conversion of high-single digits. We are seeing UPTs up high-single digits. We are actually seeing AUR up low-single digits. So, all very positive information as we reopen our stores..

Your next question comes from the line of Jim Chartier of Monness, Crespi Hardt..

Good morning. Thanks for taking my question.

Just was wondering if you could – it was a little bit of color on what the profitability of your business is going to look like in 2Q? Are there higher fulfillment costs and other costs, more and more channels that are going to weigh on margins in the second quarter despite the double digit comps? And then, could you just talk about the profitability of e-commerce in a more normal environment versus store fleet, and the stores that you are planning to close? Thanks..

Jim, this is – even though we are not providing guidance due to all the uncertainty, I can provide some color, comments regarding Q2 margins versus what we are seeing from consensus and facts at perspective. We think that the margins may be a little optimistic that we are seeing, given our projected penetration of e-commerce in the quarter.

Remember that Jane pointed out, that our stores will not be completely open until 1st of July, so heavy e-commerce penetration. We are also seeing some inefficiencies and fulfillment costs associated with the large number of ship-from-store orders that we are fulfilling.

And also, we are running into some inefficiencies in our DC and in [indiscernible], due to the social distancing and safety protocols that we put in place. So, those two things weigh on margins, and then as Jane indicated, with the promotional environment, the second quarter also weighs on margins.

We think that Q1 is – would be the most difficult quarter from a margin perspective, but we do expect sequential improvement as the year goes on..

Your next question comes from the line of Dana Telsey of Telsey Advisory Group..

Good morning, everyone, and hope everyone is safe and healthy.

As you think of the bucket of SG&A, how much of the reductions are permanent reductions? How much comes back? And then as you think about planning for the third and the fourth quarter in ordering, inventories for holiday season and even late back to school, how is it different going forward, and what do you see there and just lastly how is outlets in Canada? Thank you..

So from an SG&A perspective, we were down roughly $39 million in the quarter, with more than half of it coming out of our store base, associated with the furloughs that we took in terms of our store associates and our field management. We would expect that we are going to continue to see SG&A under last year’s levels.

We have taken a look at our corporate staff, and made appropriate adjustments, and obviously as we continue to close 200 doors this year, obviously expense will come out of the organization, both from a store payroll perspective, occupancy perspective, and potentially just a corporate structure..

And then, as far as Canada, we are seeing triple digit e-commerce growth in Canada as well, from an outlet point of view of the stores we have opened. Now remember it’s a small group, we are double-digit comping in outlet, so that has been very strong. And then I think your last question was around inventory in the back half of the year.

We are approaching it very conservatively. We obviously were not able to impact our spring and summer receipts, but we were able to impact our back half receipts. So we are being very conservative. We have to see what is happening with school openings. Many districts haven’t announced yet, so we have our eye on that.

We have our eye on when the tax-free events are going to be, a lot of that is unannounced as well. And so that’s very important 2 things for us in Q3, the back-to-school business and tax free. And then when you get into Q4, we are anticipating that there could be significant pressure with respect to social distancing traffic in the stores.

We have no idea what a Black Friday might look like for some of those big Saturday weekends in December. So we have approached it very conservatively, particularly from the stores point of view, and then obviously to talk about it, could there be a second spike..

Your next question comes from the line of Paul Lejuez of Citi..

Hey, thanks guys. It seems like you have a lower percentage of your stores opened than many other retailers out there.

Was curious as to why, if that has something to do with the centers that you are located in, not reopening, and maybe just talk about, how many stores could you have reopened but didn’t? And what percent of stores are you fulfilling out of? And then just second, as e-comm plays a bigger role and you have fewer stores now after the store closings, from which to fulfill orders, are you thinking about adding additional DC capacity? Thanks..

Sure. Well over 85% of our stores are helping to fulfill. So that is the answer there. As far as the answer of why the stores are not open, we were planning on opening a significant number of stores last week, but with the unrest of the past 10 days, we decided that we would wait until next week. So we are going to be opening on Tuesday, which is 6/16.

We are going to be opening around 350 stores. So a huge number of stores. We will open another amount on 6/23, which is the following Tuesday, and then we’re – our plan is really to have every one of our stores opened by July 1.

Now we can’t promise that, because we have a heavy concentration in New Jersey and New York, and there was a lot of moving parts with New Jersey and New York. So significant number of stores still haven’t given the exact date in New Jersey and New York, but they are all leaning toward the end of June. So that’s why we are using July 1st.

So we should have most of them open by July 1. And then as far as helping to fulfill, we were pretty – obviously we have the stores really pitching in now to help with the social distancing going on in the DC. But we had always planned to have radio kick in, in a big way for back-to-school.

That’s what we had planned for the past year, since last year’s back to school. And so they will be set up, as we get into mid-July, when the peak of back-to-school normally happens, they will be set up from mid July on to take over a big share of the burden from the stores. So we are feeling good about that.

We are on track with that and we should be fine there..

Your next question comes from the line of Susan Anderson of B. Riley FBR..

Hi, good morning. Thanks for taking my question. Nice to see the robust online growth.

So we are looking out to next year, and kind of curious after you close the 200 stores this year, how are you thinking about the P&L? E-comm is usually lower gross margin, but higher EBIT now without the rent on those stores, should we expect this to be significantly helpful to EBIT from ‘19 levels? And then also, would you expect more efficient fulfillment costs going into next year? And then finally, those 200 stores were they profitable and I guess will they reopen at all this year and then shut down after they reopen – clear the products? Thanks..

Look, it’s incumbent on us to drive our P&L through a couple of different factors. Obviously, we are thrilled with the level of business we are currently doing online, considering that 95% of the stores are closed, and we are seeing digital demand up 300%, fantastic. Open stores, obviously running at 97% of last years.

Productivity is also a very positive thing. The flexibility that we have built into our into our fleet, given the fact that we can get down to 625 store base over the next two years, is also a powerful weapon for us.

And then as Jane mentioned in her prepared remarks, the conversion of store-only shoppers that we are seeing at four times the rate of last year, is huge for us.

So now it’s incumbent upon the management team to drive the appropriate rent deals in the remaining stores that are open, drive the appropriate corporate structure, and also ensure the fulfillment capacity to support this digital first organization. We believe that all of the above is an opportunity for profit improvement over time..

Your next question comes from the line of David Buckley of Bank of America..

Good morning. Thanks for taking my question. So just following up on that last question, the 200 store closing this year, will the majority of these stores not reopen in the second quarter, or will they be post holiday closing weighted? And then just what percentage of you – sorry Mike, I will let you answer on it..

We expect that by the end of the second quarter, we will be probably in the 100 store range of closures. So half of them will take place in the ensuing month and a half. We expect that a good portion of them will open and liquidate and then will close, depending on the inventories that are left in the store if there are ship-from-store activities.

You had another question?.

Yes. Thank you. That’s helpful.

And then just what percentage of e-comm orders are now being filled from stores and can you just talk about the economics of shipping from store versus fulfilling e-comm orders from your DC?.

Sure. We would say probably about 55% is being filled right now from our ship from store capabilities, as Jane mentioned by adding ship from store, with more than double our overall capacity. And as I mentioned our capacity in both our DC and in radio is somewhat limited, based on some of the safety protocols that we put into place.

When we look at ship from store economics, obviously, they don’t have the equipment that our distribution centers have. So from a labor productivity they are probably a 40% productivity level of our DCs, and then obviously our order size has increased nicely in these last couple of months, and we are seeing our UPT is actually up over 20%.

So what we are incurring is, splits associated with that, which drives freight costs up, probably in the 40% to 60% range compared to when we’d normally ship complete orders through.

So not the most economical situation for us, but we are thrilled we have the ability to expose store inventory, ship from store and meet moms’ needs and reduce our overall inventory burden, as we move into back-to-school..

We have time for one more question. Your final question comes from the line of Marni Shapiro of The Retail Tracker..

Hey guys. Great job getting through this crazy period. So can you just talk about a couple of things? As you open the new stores, your stores are typically a pretty tight fit.

How are you thinking about either adjusting it, so there’s a little bit more space, so people can more comfortably be away from each other, and what would that look like going forward? And then online and in stores, but even online, you’ve done a nice job of expanding your footwear business, and it feels like that could be a bigger opportunity now to go forward online especially.

So could you just talk a little bit about how that business was, during the last couple of months, and if you still see that as a good opportunity?.

Yes, I mean I think footwear, though it has been an important business for us and as we saw in Q1, we certainly had some pressure on the dressier category, just like we did with the dressy apparel. But in Q2 so far, we have seen very strong demand for casual for sandal, sneakers, flip flops, those types, slides, those types of things.

So we are excited about footwear going forward and we are going to continue to fund that business. From a collateral point of view, you can go on our website and look under our COVID update. We have done a lot of work on our stores. We have signs up. We have social distancing. We have sneeze guards at the register.

We have sanitizing products, pretty much around the gamut on making sure that when we open those stores, we are setup as safely as we possibly can, for our customer. Certainly, we will have to meet our flow, traffic flow if that is necessary, into the store to make sure that we do adhere to the social distancing guidelines.

But I think the stores are very prepared and set up and – for the stores that are open, they are doing a great job..

Thank you for joining us today. If you have further questions, please call Investor Relations at 201-453-6693..