Richard Hayne - Chief Executive Officer Frank Conforti - Chief Financial Officer Trish Donnelly - Global Chief Executive Officer, Urban Outfitters Group Oona McCullough - Director of Investor Relations.

Good day ladies and gentlemen, and welcome to the Urban Outfitters Inc., First Quarter Fiscal 2021 Earnings Call. At this time all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time. [Operator Instructions] As a reminder, this conference call is being recorded.

I would now like to introduce Oona McCullough, Director of Investor Relations. Ms. McCullough, you may begin..

Good afternoon and welcome to the URBN, First Quarter Fiscal 2021 Conference Call. Earlier this afternoon the company issued a press release outlining the preliminary, financial and operating results for the three-month period ending April 30, 2020. The following discussions may include forward-looking statements.

It’s important to note at this time, the global COVID-19 pandemic has had and continues to have a significant material impact on URBN’s business.

Given an extremely high level of uncertainty about the duration and extent of the virus’s near and long-term impact to the global retail environment, content discussed on today’s call could change materially at any time.

Accordingly, future results could differ materially from historical practices and results or current descriptions, estimates and suggestions. Additional information concerning factors that could cause actual results to differ materially from projected results is contained in the company’s filings with the Securities and Exchange Commission.

On today’s call you will hear from Chief Executive Officer, Richard Hayne and Chief Financial Officer, Frank Conforti. Following that, we will be pleased to address your questions. For a more detailed commentary on our quarterly performance and the text of today’s conference call, please refer to our investor relations website at www.urbn.com.

I will now turn the call over to Dick..

The first is continuing to protect the health and well-being of our associates and customers. We are committed to re-opening our stores and offices quickly, but responsibly. From a health and safety perspective, we are following recommendations issued by the CDC, as well as State and local regulators.

All associates are required to wear masks and maintain recommended distancing. Stores will operate with reduced hours and reduced occupancy levels and they will be cleaned daily using CDC issued protocols. Hand sanitizers are available to customers and associates.

Our home office employees will continue to work remotely when practical, but those that do return will wear masks and work at a greater distance from their co-workers. Many meetings, especially large ones, will continue to be held via Zoom. Our second focus is driving revenue by reopening stores and maintaining strong digital growth.

As of today we have over 40% of our stores open, 252 in North America and 27 in Europe. We hope to have almost 100 more of our stores open by the first week in June. Initial customer traffic and sales levels in newly re-opened stores have been tepid, but have improved each week.

We believe a return to near pre-virus levels will take many quarters and a medical vaccine or cure. Since the sales ramp-up is slow and most stores will be open for only part of the quarter, total comp store sales in Q2 could be down more than 60%. Digital however is quite a different story.

We are fortunate our brands have well-developed digital capabilities prior to the pandemic. Online traffic and conversion have exploded in the past six weeks with a 63% jump in new online customers. This has produced robust double-digit increases in sessions and demand. We have seen different results by category and by brand.

Home product and casual apparel like active wear, lounge, renewal and knit tops are over-performing, while dressier apparel and special occasion products are underperforming. Since the Urban brand has a higher penetration of the former categories, its digital comp increase is the highest of the three brands.

Our merchants have responded to these consumer preferences and are quickly shifting orders into trending categories and looks. We believe strong double-digit online demand could continue throughout the second quarter.

In summary, no fashion retailer is immune to the effects of COVID-19, but I believe we have reacted quickly and taken the necessary steps to mitigate those effects and ensure that URBN emerges in a strong position when the environment normalizes.

We have a solid balance sheet, benefit from a high penetration of digital sales and well-developed digital capabilities, are slowly reopening our store fleet, have a portfolio of unique brands each with a strong emotional connection with their customer, and most importantly, we have a tremendous team of highly talented, creative and dedicated employees.

Now, let me say a few words about our efforts to help support the local medical community during this crisis.

Over the past few weeks URBN has been able to support our local hospitals and medical facilities through philanthropic donations of more than 300,000 surgical masks, a half-million hospital gowns, and from our food and beverage group, over a 1,000 meals delivered to healthcare workers on the frontline.

These and many other smaller efforts by our teams is our way of saying ‘thank you’ to the medical community that risks all to save so many. In closing, every quarter I thank all brand and shared service leaders, their teams and all associates world-wide for their hard work and dedication. But this quarter is special.

Each of you has gone above and beyond normal expectations. You and your teams have accomplished more than I thought possible in a short amount of time, under tremendous pressure and uncertainty, while also having to learn new ways of working.

So, thank you all! Thanks also to our many partners around the world, and to our shareholders for their continued support. That concludes my prepared remarks. I now turn the call over to Frank Conforti, our Chief Financial Officer. Frank..

Thank you, Dick. Wow! What a difference a few months can make. As Dick mentioned, we started the quarter with exceptional performance and we’re excited at the opportunity to get on this call and report a strong start to the year.

Then, as the coronavirus began to spread in March and as the quarter unfolded, we have ended up answering questions on our financial stability instead. I think I have run more financial scenarios in the past several weeks than I can remember doing so in the first 20-plus years of my career.

With that said, I am happy to report that our business has performed better than most of those scenarios, and we have ended the first quarter in a strong financial position due to the exceptional and expedient effort by all of our teams.

I would like to take a few minutes and talk through our first quarter cash flow and what our second quarter could potentially look like if the environment continues to unfold as it has over the past several weeks.

Please keep in mind, there is nothing but uncertainty in the near future right now and every single day truly feels like a new beginning, so these are only our current thoughts as of today and certainly can change at a moment’s notice. First, let’s walk through the first quarter cash flow and our cash position.

We entered the first quarter with over $530 million in cash and marketable securities with zero debt. During the first quarter we used $32 million for working capital purposes, $44 million was spent on capital projects and $7 million on share repurchases.

The share repurchases were completed prior to the known spread of the coronavirus pandemic in the United States, which forced the company to close its stores for an extended period of time. In total, we used $83 million of cash.

Additionally, during the quarter, we borrowed $220 million on our $350 million Asset Backed Line of Credit facility, leaving us with over $667 million of cash and marketable securities at quarter’s end.

As Dick mentioned earlier, during the quarter we quickly put in several measures to protect our company’s future and financial flexibility going forward. We have reduced our current year planned capital spend of $260 million by over $140 million through cancelled or delayed projects.

We rapidly reacted to changing consumer demand and reduced inventory receipts leaving our retail segment inventory down 18% at quarter end.

We reduced our SG&A expense plans through a hiring freeze, Board and Executive pay reductions, suspension of raises and bonuses, employee furloughs, as well as reductions in non-payroll expenses in areas such as creative and marketing.

As a result of our disciplined inventory and expense management, we believe our cash uses in the second quarter could be less than the first quarter. Our cash receipts for the second quarter could remain consistent with the first quarter.

In order for this to happen, our digital business would need to continue to perform at a high level and stores would need to continue to open, remain open and slowly improve their sales productivity. Please note that stores are opening at significantly lower comp levels and very slowly improving over time.

In summary, based on a healthy digital business, stores re-opening and slowly improving in their sales productivity for the remainder of FY21, tight inventory and expense management and our strong cash position, with no debt coming into the COVID-19 pandemic, we are confident we have sufficient balance sheet strength and liquidity to support URBN through FY21 and give us the opportunity to resume our focus on strategic growth initiatives the following year.

Additionally, please note, that while we have drawn down $220 million on our $350 million Asset Backed Line of Credit facility, we do have several options for additional borrowing capacity available to us if we thought it was necessary and appropriate. Lastly, I want to second Dick’s thank you to all of our teams.

Their leadership and swift actions in the quarter have preserved the strength, stability and future of URBN. I cannot thank each of you enough. As a reminder, the forgoing does not constitute a forecast, but is simply a reflection of our current views. The company disclaims any obligation to update forward-looking statements. Thank you for your time.

We will now turn the call over for your questions..

Thank you. [Operator Instructions] Our first question comes from the line of Kimberly Greenberger with Morgan Stanley. Your line is open. .

Okay, great! Thank you so much, and thank you for the thorough run through, especially on the cash flow. My question was about the second quarter comp store sales, which I think you said could be down over 60%.

Is this stores only and is that separate from digital and if you could just comment a little more on digital? How – you said double digit growth in Q1. If you could get any more specific, I think that would be helpful and would you expect ongoing double digit growth in digital in the second quarter? Thanks so much. .

Hi Kimberly, this is Dick. Let me talk about the stores. At the beginning, we do see the stores when they did come back, traffic was down initially around 80% and now has come back about 60%. When it was down 80%, I have to remind you that we were probably the only store on a block or in a mall open, so I don't think that that was indicative.

Right now in North America our stores are running down about 65% in traffic and about 50% in sales. In Europe we're seeing a little bit better reaction, where traffic is down about 50% and store sales are down about 30%. Now that obviously changes day-to-day, but that's the general range.

And we do see it creeping up, and when I say creeping, it's slow, but we do expect it to continue to creep up.

And for the entire second quarter, I think we're looking towards store sales to be down anywhere between 25% and 30% overall and we expect that to continue to go up into the third quarter and in the back half of the year, probably be down around 20%; that’s stores.

Digital, as I said on my prepared remarks, our digital business is very strong right now. We're seeing comps in May of up 30%-plus in North America and in Europe where it's over 100%, and so we're very pleased with that, but I think our biggest surprise and what we're most pleased about is how many new customers we are seeing.

And new customer account is up over 60%, and so we feel very confident that the direct business will continue into the second half of the year, because we have so many new customers. .

Kimberly, this is Frank. Just to clarify, I think the down 60% on stores takes into consideration the staggered opening of stores throughout the quarter and honestly I can tell you that's a very difficult number to pin point right now as States sort of continue to change their plans on a daily basis. Our plan continues to change as well.

As Dick mentioned, once stores are opened for a few days we have sort of seen them revert into that down 50%-ish type range, but again that number being down 60% for the quarter reflects that staggered opening of the stores during the quarter. .

Your next question comes from Lorraine Hutchinson from Bank of America. Your line is open. .

Thanks, good afternoon. I wanted to talk for a moment about gross margin and specifically merchandise margin.

Now that you've taken the inventory reserve and you have your inventory in better shape, would you expect the merchandise margin to stabilize beginning in the second quarter or is that more of a back half thing? And then, just piggybacking on that, if you could talk a little bit about how receipts are looking for the second half? Thank you. .

Hi Lorraine, this is Frank. I will take that one. I certainly – you know obviously there's nothing but uncertainty, and Dick and I were sort of joking as to how many times we were going to say that on the call tonight.

There is nothing but uncertainty as we look forward to the second quarter, but that being said, you know I think there's certainly opportunity for improvement in merchandise margins as it relates IMU.

We did take some product liability charges in the first quarter, which impacted gross profit margin, and that was really around certain cancellations with very specific factories and suppliers that we worked with for years and I wanted to ensure the ability to work with going forward; they are key suppliers of ours.

As it relates to merch markdowns, I would tell you that you know right now we have taken a meaningful inventory obsolescence reserves to sort of protect against the future need for additional markdowns and the risk in inventory.

But I just don't know necessarily what the promotional environment is going to look like as stores come online and other retailers are looking to hold on to as much of their business as we can. I can tell you that our businesses, largely speaking have performed better than we had anticipated they would from a from a markdown perspective.

So I think a lot of this is going to be indicated based on where the market lands. Thank you. .

Your next question comes from Paul Lejuez with Citi Research. Your line is open. .

Hey guys, thanks.

Dick, curious if the current situation makes you rethink at all about investing in the newly or the restaurant business, you know over the next several years and also I'm curious, how the current situation you know make sure think about the ultimate store count, what is the appropriate store count for each of your banners within the U.S.? Thanks. .

Hi Paul, thank you very much.

As it relates to Nuuly, I think we all feel very strongly about both rental and resale, and we think there's a lot of opportunity and they are sort of direct cousins, and we think there's a lot of opportunity in both of those areas and so we’re excited about Nuuly and its prospects going forward and anticipate funding that on an ongoing basis.

The restaurant business we have to wait and see. The restaurant business is crazy right now, particularly here in Pennsylvania where all the restaurants are. As they are talking about you know making – having a restriction of 30% of the occupancy, while there is absolutely no way that anybody can make money with 30% of their customers.

So I don't know how long that will last, and I don't have any idea when the restaurants in either Pennsylvania or New York are going to reopen, so that’s a to-be-determined.

As it applies to store counts, and I think that this is a very important area where we believe strongly that the stores are an important part, an important component of our omnichannel strategy and that strategy gives a lot of choice and flexibility to the customer, and that's always what we're trying to do, please the customer.

So we want to continue having a fleet of retail stores. But I have to say that, you know in order to do that, all the channels including the stores have to be profitable and that implies occupancy costs that reflect the traffic that's is at-hand.

And so we are currently in negotiations and discussions with our landlords and developers as to what those lease terms will be and you know what will be our occupancy costs.

So I think the answer to your question is that we're not afraid to close stores and we always have closed stores that are unprofitable, and we will do so again, but we are also open to opening more stores and really the decision comes down to the relationship between store traffic and occupancy cost.

So as we negotiate with our landlords, some of the new leases we are seeing have very, very favorable terms, and even if traffic were to not come back to where the pre-COVID levels, they would still be profitable, and so we believe that they are a very viable part of our business and want to maintain it.

And in those cases where landlords aren’t reasonable and are still thinking that it's 1995, and they can command any rent that they wish, well they can get it from somebody else, not us. So, that's where we are. .

Your next question comes from Kate Fitzsimmons with RBC Capital Markets. Your line is open. .

Yes, hi! Thank you very much for taking my question. Frank, just real quick on SG&A.

With the commentary that 2Q comps could be down more than 60%, is there any view on how we should consider SG&A dollars in the quarter? And just how to think about SG&A dollars trending into the back half as we start to see them and the stores reopening? That would be helpful. Thank you. .

Yeah Kate, this is Frank. Thank you for your question, and just to reiterate the store comp number was just on stores not necessarily our retail segment. It is certainly very possible that the second quarter looks very similar to the first as it relates to total top line.

With that being said, as it relates to SG&A, I think it's important to keep in mind that one, I think we did a great job of reducing SG&A in a very short period of time, reducing it 8% versus last year and even more so versus our 9% planned increase which was what our budget was coming in.

With that being said, most of our actions that we put in place were put in the second half of the quarter and quite frankly, most of them were put in the last month of the quarter. So this means the impact and benefit could be greater in the second quarter.

And you know if the quarter was to progress with digital remaining strong, stores continuing to open and all stores opening by the end of the quarter, it is possible that our SG&A would be down versus last year at a rate nicely larger than the 8% reduction that we saw in the first quarter versus the prior year. .

Your next question comes from Matthew Boss with JP Morgan. Your line is open. .

Great, thanks. Dick, on the inventory front, you mentioned a reasonably clean position today.

What’s the level of overall apparel in the channel? I guess as best as you can size it up today and what level of promotional activity should we brace for as we think about back to school and holiday?.

Yeah, I’ll let Frank handle the first part of the....

Thanks Dick.

So Matt whatever I tell you, is we are going to give out sort of inventory by category, but I truly want to command the brands and our sourcing organization for an incredible job in honestly managing what was a nearly impossible circumstances right now, as it relates to managing inventory, predicting demand and managing was the very, very difficult supply chain.

Our total company inventory will be down 18% right now. With retail segment down 18% and wholesale segment down 16%, I think it's pretty impressive.

We believe it is possible for inventory to be negative and quite frankly a similar position for the second quarter, but as you know and we've essentially quoted the same around everything right now, there is a lot of uncertainty around the top line and supply chain, but we do think that that is a possibility.

I also want to say, just relative to the promotional environment as I touched on earlier, that we did record a $43 million inventory obsolescence reserves and that was between the retail and wholesale segments, and that was based on some of those increased each buckets that were out there, as well as you know around the increased uncertainty around consumer demand, and this is obviously significantly higher than any normal inventory charge that we would have taken.

.

Your next question comes from Janet Kloppenburg with JJK Research. Your line is open. .

Good evening everyone and thanks for all the detail. Dick, there is a lot of talk about how the consumer will change as a result of the pandemic.

That their shopping behavior and consumption will change dramatically with a lot more people working from home and getting used to digital shopping and I’m wondering if you could just comment on your outlook for how that may impact your business and how that may shape the positioning of the merchandising and marketing for the three brands.

And Frank, it sounds like the gross margin will not be down anywhere near as much in the second quarter as the first quarter. I know you’ll have pressure because of the digital penetration. But maybe you could give us brackets around that. Thanks so much. .

Okay Janet, I don't think there's any question about what the consumer is going to change or has changed and if you are asking me to project if they will come back to their habits pre-COVID, I think that they certainly won't until and unless there's either a cure for COVID or there's some other way that they lose their fear of the disease, and that will take many months.

So I would say for the remainder of at least through the holiday season, the remainder of this fiscal year, I would expect consumers to still be practicing social distancing and all the other terms that you hear every day on all the media. So I think that is a big change.

I think there will be much more working from home, and I also think that to some degree even if there were a vaccine or a cure, people have started to like in some cases working remotely through Zoom, and so I think there will be a little bit more of that.

But I do think that once there is – that fear is gone, I do believe that people will want to socialize again. I think that’s sort of built into our genetic structure.

People are going to want to go back out to have dinner; people will want to go to sporting events; how about things like graduation? Yeah, they're going to want to do all those things that they did before.

And I think that when you look at fashion, you know I’ll typically talk to you about things like macro faction and micro-fashion, but the way I'm thinking about it now is more about the function of fashion and how the functionality drives what people are looking for.

And currently, many of the functions that drive apparel particularly, apparel purchases, many of those functions are no longer either – well, many of them are barred altogether. And so there is not a lot of reason for people to buy the fashion when they can’t use it for the function.

When the functions come back, I assume the demand for those types of fashion will come back. Until that time, they won't. I cannot predict when it will come back. .

Janet, this is Frank. Let me walk through sort of gross profit margin in the quarter and you know what that means for the second quarter as well. I’m sure it’s on a lot of people's minds.

To start with the biggest driver of our gross profit margin decline, it was store occupancy deleverage, so as Dick mentioned, we are in very active and engaging conversations with our landlords.

As of quarter end we had not reached any updated agreements and therefore our required account for occupancy expense is at historical rates until any new deals are achieved. With stores closed for half the quarter, you can imagine this resulted in significant deleverage.

Additionally, we recorded a $14 million preliminary impairment charge related to our store assets and all together discounted for over 800 basis points in store occupancy deleverage in the quarter.

As Dick has discussed, obviously it is more important than ever for us to align our store traffic patterns with occupancy expense right now with our landlords. The next biggest driver was inventory obsolescence, which I think I've mentioned a few times. So we did record a $43 million inventory obsolescence charge in the quarter.

Third, was delivery expense and the biggest driver here is, honestly is just the increase in penetration of the digital channel, which provides for a benefit in occupancy leverage under normal circumstances and obviously didn't do so this quarter.

In addition to just the increase in penetration of the digital channel, delivery spent also deleveraged due to lower average order value to the increased promotions in the quarter, as well as an increase in split shipments, due to the increase in volume of packages that was delivered from store inventory.

We worked really hard to maintain pick, pack and ship in the quarter in order to try and get as much inventory out of stores as we could, which increased with shipments, but we think will provide to be a benefit to inventory and removing some of the markdowns necessary going forward as we do open up stores.

The last main driver, which is what I believe Lorraine asked about, which was merchandise markdowns, merchandise margins I should say, which include mark down in IMU.

Markdowns were higher obviously in the quarter due to increased promotions and markdowns in order to keep inventory moving, and IMU was lower due to certain product liabilities that we took on cancelled orders within the quarter.

If all else honestly remained equal, we currently do not believe we would need to record an inventory obsolescence charge of the magnitude of what we did this quarter.

In addition to that, we currently do not believe that we would need to incur product liabilities as we did in the first quarter and hopefully we can come to some reasonable agreements with many of our landlords, all of which creates for opportunity for improved margin in the second quarter versus what you've seen in the first. .

Your next question comes from Adrienne Yih with Barclays. Your line is open. .

Good afternoon, everyone. I'm glad everybody's doing well. I guess, other than the sanitization measures in the stores, you're always good with us about sort of the view into the future.

What is the biggest changes that you envision happening at the store level? Will they be less individualistic? You typically run a pretty decentralized store model, more show room like. How do you how do you view the stores, you know three years from now? And then Frank, where in the P&L do you see permanency in reduction of fixed expenses.

I know you talked about rent. Can rent go variable to some larger extent, and then how much less store payroll do you need? Thank you very much. .

Adrienne, I think I'll differentiate between what we plan to do and what I see happening in the market. What I see happening in the market is an awful lot of retail space becoming basically off price centers, as opposed to what they have been in the past, which are full price.

I think that we're seeing much more of the full price happen at the direct-to-consumer level, and when you ask yourself, well why is someone going to go to a store, particularly unless you're young and it's a social thing, the reason might be price. So I think that that's going to be a driver.

What I see us doing as a result, as we open more new stores, I would say that we will probably be downsizing a bit and – but other than that I think the way we're viewing our stores is we want them to stay pretty much the same in terms of the look of it, the feel of it and the experience of it.

So I don't know if we are completely out of phase with the rest of the market, but that's how I see it looking. .

Adrienne, as it relates to sort of fixed versus variable and the landlord negotiations, I certainly don’t want to comment on any specific negotiation and where they are landing.

I think we are looking for all opportunities in order to align our expense ratios with traffic and we would love for that to be variable in nature and we’ll see exactly where they land as the conversations continue to unfold. As it relates to store payroll, I can't commend the store leadership teams and home office teams enough here.

I can tell you with the utmost confidence that I think we have the ability, the leadership, the systems and the process in place to continually align our store payroll in providing what is, has always been known an incredible experience in our stores, along with where sales demand is, and that’s today and going forward, and I think our teams have done an amazing job in doing so and getting stores opened, and planning for what demand can look like in the future.

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Your next question comes from Mark Altschwager with Baird. Your line is open. .

Good evening, thanks for taking my question.

Following-up on the rent and landlord discussion, I’m wondering, can you give us a sense of what percent of your store fleet has leases that are up for renewal over the next couple of years? You talked about how rent structures need to change in order for our store level economics to makes sense going forward.

I guess I'm just wondering how long that it might take to get the majority of the fleet to a place that you think is aligned with the new normal in terms of digital versus physical penetration. .

Okay Mark. About 50% of our stores leases are expiring in the next four years, and I think only a very, very few are longer than eight years. So it's a – you know I think we have a reasonably good ability to negotiate the ones that are coming up for renewal, the ones that are you know less current or having extended period.

I think what we have to do is rely on the fact that the landlords have to know that if they want to continue to have the same level of rent eight years from now, we're not going to be there, so we'll see what happens. .

Your next question comes from Simeon Siegel with BMO Capital Markets. Your line is open..

Thanks guys. Hope you are doing well enough through all of this. Frank, can you talk about the negative gross profit of wholesale? Just any color on explain the degree of obsolescence and higher discounts there.

And then just given the pre and I guess during COVID trends, anyway, does it change anything in terms of how you guys were approaching wholesale. And then just lastly, any help outlining where the receivables exposure for wholesale line right now? Thank you..

Sorry, Simeon. I think I missed a little bit of that.

What I can tell you relative to wholesale's gross profit margin in the quarter, you know obviously all of our partners business was significantly impacted, as well as ours, and many of our partners have significant stores as a part of their operations which pressured our top line, as well as the inventory obsolescence charge that we took across URBN.

Almost half of that was taken in wholesale within the quarter and that does fall into gross profit margin..

Our final question will come from Marni Shapiro with The Retail Tracker. Your line is open..

Hey everybody. I am glad to hear that you are all staying safe. It's actually nice to be on these calls and hear some birds chirping and kids in the background. Could you talk a little bit Dick about how we should think about the timing of back-to-school? You have a young customer at Urban; it's your strongest business.

College sounds like it's happening tentatively. So I guess how are you thinking about that you have some things that are pretty traditional promotionally like on denim. Is this being pushed a little bit later? And along those same lines, you've had very strong social media engagement.

Has that ramped up and even gotten stronger as the weeks and months progressed with this younger shopper?.

Marni, I'll take a little bit of that and then hand it over to Trish, because she is the expert on Urban. I think that what I've heard from a lot of schools is there is a wide range and tremendous - and here we go again, using the word uncertainty about school openings.

I've heard of school saying they're going to open in early August and you know close early for holiday. I've heard other schools say they're not going to open at all. So it's very, very difficult to say.

My sense of it might – if I had to bet on it, I would bet that schools will open and I would bet that they're going to open basically when they always have opened in either late August or early September. How are we going to prepare for that? I don't think it's going to be a heck of a lot different.

We're scrambling to get the – make sure that the inventory we need is there. As I went over earlier in my prepared commentary, the supply chain has been a nightmare, air freight out of Asia is not only difficult to get, but it's incredibly expensive. So we're having to boat most of the things.

So I think that will be a little bit late to our preferred inventory levels for back-to-school, but I don't think that's necessarily going to kill us.

Trish, you want to say a few words about it?.

Yeah, I think you're spot on with this scrambling for the right inventory and that's really what we're working on. And with such a wide range of openings, if you were to ask me a couple weeks ago, we would say yes, we're pushing back-to-school out a month.

Today, we're saying no, we're not pushing back-to-school out a month, so it changes with the news and with the uncertainty as everything else. In terms of social engagement, yeah Marni, we've seen a tremendous like increase in customer engagement across most of our social channels.

So that's been really exciting to see and I need to commend the marketing and the merchant teams working closely together to make that happen. But the pivots were quick, the content is amazing and I think they did such an exceptional job, particularly you know on that part..

Alright, I think that that ends the questions. I thank you very much and I very much look forward to talking to you in a few months. Thank you..

This concludes today’s conference call. You may now disconnect..