EXPR
#To answer the first question around the overall metrics, as I mentioned earlier, what we saw is a significant decline in the traffic; and then from a conversion standpoint that was up; and therefore our transactions overall were down.
From an AUR, what we saw in Q1 is the AUR was close to flat and slightly up.
And as far as Q2, looking forward into Q2, we're expecting those trends to remain obviously, as I said, similar, given the guidance that we provided.
Going into your question, <UNK>, for me, in terms of the retail inventory and the position going into Q2, what I was pleased about was at the end of Q1 we finished with retail inventory down 3.4%.
So in terms of the spread versus the comp I was pretty happy in terms of how that finished.
Total inventory was up because of the Outlet inventory, the Express Factory Outlet inventory, and the new stores that we'd opened.
Giving guidance on inventory further into Q2, I can't do that.
But overall at the beginning of the quarter, I'm pleased at where we stood.
Talking about July, I think what I'm most excited about is a relaunch of One Eleven, which we will be doing with both men's and women's.
This will be the first introduction of the launch of One Eleven in men's, and I think we have a great assortment lined up in the way that we're looking at it in women's.
I think in terms of some of the trends that we're seeing overall, we've seen continued strength in denim in both men's and women's, so happy about going into the back-to-school time frame with a position of strength in denim.
But some of the trends that we've seen really successful results with are the 1990s trend, so looking at mid- and high-rise.
We've done very well with bralettes and bodysuits, and we're starting to see some really great results with bombers.
We're looking at romantic tops ---+ and feminine but less boho, continuing with off-the-shoulder.
And then details continue to be important in women's.
So overall I feel good about the trends that we have going into the back half of Q2 with and also going into the fall season.
Okay, <UNK>.
In terms of your first question, on open-to-buy for Q3, one of our focuses has been in terms of shortening our lead-times and ensuring that we are keeping our open-to-buy dollars open even longer.
We have done great work around that, and looking at the numbers, we are significantly open into Q3.
In terms of the levels of demand that we expect, I think based on the amount that we have open I think we're in a position to respond very, very quickly to the demand of the customers and ensure that we have the right levels in Q3 and in Q4.
This is <UNK>; I'll follow-up on that as well.
<UNK> mentioned that we will be clean heading into the fall season.
We planned for obviously low-single-digit comp and came in at a negative low-single-digit comp, with a lot of that happening back half of March and into April.
So it was more of a sudden drop for us and therefore there will be some liquidation.
But we're committed to going into the fall season very clean, while at the same time protecting the newness as we head into fall to make sure that we can generate some momentum.
As it relates to the question from the regional performance, what we saw in Q1 is better performance in the Northeast and mid-Atlantic and Midwest compared to the rest of the country.
Sure.
From a monthly comp standpoint, we do not report monthly comps.
But what we said in the prepared remarks was we saw strong performance in the first half of the quarter; and then right around the mid-March time frame, we saw drop-off in the traffic and therefore an impact in our comp performance for the quarter.
I think in terms of preparation for the back half, it's not a matter of if we don't see the traffic improve.
We are actively focused on ensuring that we are driving the traffic that we can get into our stores.
As I said to <UNK>'s question earlier, we are focused on our product and our value proposition, elevating our brand, and ensuring that we are acquiring customers and retaining customers.
As I said, in terms of the open-to-buy liquidity, the great news is that we are very open in terms of our inventory.
So as we go into Q3 and into Q4, we will plan the business accordingly.
Okay.
I'm just writing down your final one.
Okay.
In terms of the environment, we saw that we were doing very well in February and at the beginning of March, okay.
And then, it literally just dropped off.
So I think a significant amount of it is the macroeconomic environment.
Having said that, we're focused on controlling what we can control and ensuring that we are doing the best job possible that we can do.
I am extremely proud of the team here in terms of the work that I'm seeing day in and day out.
I think it's as good if not better than anything that we have done here at Express in the past.
So I feel very positive about the way that we look into it.
In terms of the competitive promotional environment and what we've seen, yes, clearly people are trying to move through inventory and liquidate inventory.
Our focus is in ensuring that we're going after a balanced approach and that we're not going after one of the three levers; we're going after all three levers, and we're going to continue down that path.
E-commerce results was your second question.
Directionally what we have seen, as I said on the call, on the prepared remarks, directionally we have seen a significant improvement in our e-commerce performance since we transitioned to the new distribution center.
So I'm very pleased with the results that we've seen there.
Yes, I think that it is directional in terms of what we're seeing.
But again I'll go back to what I said: We're focused on driving the traffic that we need to drive into the stores, but we are focused above all else on the total Express brand.
Then finally in terms of Karlie Kloss, you will really see the work ramp up on that in August.
You will see her appearing in all of our work around the back-to-school time frame.
So from the $14 million standpoint that we've mentioned on the prepared remarks, as I said earlier, we look at the financial architecture constantly and look for ways to improve our overall financial architecture and be more efficient and effective.
As such, we have identified through our expenses that we have a $14 million opportunity that is across all channels of the business, across all the departments.
So we're going to start implementing that in the back half of Q2, with expectation that by the beginning of Q3 and the back half of the year we are going to see about $7 million of expense savings.
Most of these saves will be materialized from an SG&A standpoint and not B&O.
Some of it will be in the B&O, but most of this will be in the SG&A area; I would say it is more like a 90/10 ratio.
As far as the SG&A expenses and the expectations for the balance of the year, I would say that at this point we're expecting our overall SG&A expense to be relatively flat to up from an absolute dollars standpoint, slightly up to last year's absolute dollars.
Then on the last part of your question, from an inventory standpoint, we do not provide guidance on forward-looking inventory.
But what I will tell you is that we constantly strive to ensure that our inventory levels as we are going into the August BOM and any forward-looking BOM is not ahead of the expectations from a sales standpoint.
Therefore, we're going to continue to manage our open-to-buy and inventory levels to ensure that we don't find ourselves in a position that the inventory is significantly higher than expectations of the business.
Okay.
In terms of the store traffic, it's very similar to what we have seen, and we're seeing that continue.
In terms of trends by department, I really don't want to go into too much detail for competitive reasons.
We continue to see strength in denim; we see strength in knit tops.
But overall I don't want to go into a lot of detail against those.
The guidance that we provided is in light of what we have seen in the back half of Q1 and our belief of what the trends will continue to be in the balance of the year.
The guidance does not in any way, shape, or form include any softness in specific categories of the business.
It's really largely predicated on the traffic declines that we've seen and the results that have been associated with that.
And as <UNK> mentioned, there clearly are some macroeconomic issues at play here.
But we are turning over every stone in this business to make sure we're executing as well as we possibly can and looking at those three facets in particular that he talked about around product/value proposition, the brand building, and the customer acquisition and retention.
That's critical, and we're all actively working on each of those every day to make sure we're putting our best foot forward.
Absolutely.
What we're trying, is to pull the levers that we can pull to see the response in the business.
As <UNK> just said, we are actively looking at everything in terms of driving the business and in terms of driving the traffic into the stores.
We are constantly testing and experimenting in terms of the approaches that we should take to drive the traffic and to drive the transactions.
So, yes, expect to see that continuing.
Yes, they did start off decently.
I don't think that we've seen that continue.
You look across the market; you look at the levels of promotion on shorts.
I would say that everybody is having a hard time.
We're focused on what we need to be doing in terms of our short business to drive that forward.
The denim shorts continue to be good, but we're hoping to see this weekend with Memorial Day and with warmer weather across the country that we will see that business pick up.
Sorry, can you repeat your question, <UNK>.
We can't hear you clearly.
Okay, in terms of the key item strength, we've seen the decline in the sales of key items very similar to the decline in total that we've seen.
So it's not a matter of collection versus key item, key item versus collection; it is very similar across the board.
What we have seen in terms of the slight difference in terms of the trends of the categories is a greater strength on the casual side of the business than we've seen on the wear-to-work side of the business.
We are constantly adjusting.
With the open-to-buy liquidity that we have, we are constantly adjusting that and we're doing it weekly.
No, I feel very good about our trends and the way in which we've covered our trends over the quarter.
<UNK>, do you want to answer the ---+.
<UNK>, you asked in the back half of the year if we're expecting merchandise margin to contract by more than what we're expecting in Q2; is that correct.
Actually in the back half of the year, and that is Q3 and Q4, given the fact that we're planning on clearing through the spring merchandise in Q2 and be in a clean position for the fall season, our expectation of the merchandise margin is by no means being worse than Q2 expectations.
Actually, at this point we're expecting them to be flat to slightly up.
We expect on the back half overall some contraction and deleverage in merchandise margin and ---+ sorry, in B&O and SG&A, given the sales expectation.
On the first part of your question, we do not disclose specific A versus B store mall performance.
But we've seen fairly consistent performance across the board.
In terms of your second question on brand equity versus product and lowering ticket, look, we are constantly looking at every single department and the approach that we're taking to ensure that we are driving our business.
You will have noticed some lower tickets in One Eleven, in our One Eleven line this season.
We've seen some success from those items.
We're constantly assessing it and we're balancing it between the level of brand equity, promotion, and product.
Really, we want to ensure that we are offering our customers the best price-value proposition that he and she can get in the mall.
We will not compromise on quality, but we are constantly looking at our sources of supply.
But we have very good partnerships out there, and we work very, very well with our supply base.
This concludes our call for today.
Thank you for joining us this morning and for your ongoing interest in Express.
