Express, Inc.

Thank you, Joey. Good morning and welcome to our call.

I'd like to open by reminding you of the company's Safe Harbor provisions. Any statements made during this conference call, except those containing historical facts, may be deemed to constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.

Actual future results may differ materially from those suggested in forward-looking statements due to a number of risks and uncertainties, all of which are described in the company's filings with the SEC including today's press release. Express assumes no obligation to update any forward-looking statements or information except as required by law.

Our comments today will supplement the detailed information provided in both the press release and the investor presentation available on the company's Investor Relations Web site. In addition, you can locate a reconciliation of any adjusted results discussed in our comments to amounts reported under GAAP on our Web site or in our earnings release.

With me today are Tim Baxter, Chief Executive Officer; Perry Pericleous, Chief Financial Officer; and Matt Moellering, President and Chief Operating Officer. I will now turn the call over to Tim.

Thanks, Dan, and good morning, everyone. Throughout 2020 we have advanced the EXPRESSway Forward strategy, and taken appropriate actions to manage our liquidity.

In the third quarter, we intensified our focus on ecommerce demand. Transactions were up 17%, conversion was up 10%, and we delivered sequential improvement quarter-over-quarter.

We shifted gears on product, driving down the high penetrations in occasion-based dress categories, and increasing the proportion of casual which outpaced our overall performance. We responded to depressed mall traffic by putting a sharp focus on conversion in our stores, and saw double-digit percent increases across each of our channels.

We completed the first phase of our loyalty program relaunch, and added more members than last year, who we know spend three times the rate of nonmembers. We redirected our marketing dollars to drive brand awareness, resulting in a 77% increase in engagement across our paid social channels.

We significantly enhanced our omni-channel capabilities, and our buy online pickup in-store demand grew by a factor of six times over the second quarter. We reduced our corporate workforce by an additional 10% to calibrate the organization through our improved operating model as we move into 2021.

Our strategy is working. The foundational pillars of product, brand, customer, and execution are the right ones, our decisive action to bend the right ones.

Our third quarter results are clearly not where I want them to be, but they are a reflection of the environment, and not a representation of the strength or power of our strategy. Now, let me provide a more detailed update on the key initiatives within those four strategic pillars.

I'll start with product. Our historical strength has been in occasion-based dressing, so of course we have been disproportionately impacted over these last several months.

Historically, the percentage of wear to work category specifically has had the highest inventory penetration in the third quarter, representing over 40%. We pulled back on our investment in the occasion-based categories, and have pushed forward with more casual, versatile categories, significantly changing their penetration versus a year ago.

For example, in men's tops, we cancelled 500,000 units in dress shirts, our biggest category, and repurposed about half of that inventory with more casual, versatile chambray, flannel, and corduroy, which all saw very strong consumer adoption and higher sell-throughs. We also saw early strength in men's polos, which have become the new work shirt, and our new X logo graphic tees.

We've chased into more than 250,000 units in these polos and graphic tees, and both categories achieved a monthly sequential improvement in the third quarter, and ended October with positive comps. We cancelled roughly 200,000 units in men's suits and replaced that inventory with our new Supersoft denim and elevated joggers.

In women's tops, we cancelled over 400,000 units of dressy blouses, and when after what we call Express Essential Knits, and doubled our sales in that category versus last year. In women's pants, we cancelled 500,000 units of dress pants, and reinvested in reorders of our Luxe Comfort Knit Jeans, joggers, and leggings, and are seeing continued positive momentum in these categories.

We have steadily increased our sales penetration of total denim this year, and it now represents 49% of our total bottoms business, up from 42% last year. Denim is the foundation of a modern, versatile wardrobe, and we offer premium quality denim at very compelling price points.

We launched three new fabrics in the third quarter, Luxe Comfort Knit, Luxe Comfort Supersoft, and Hyper Stretch Temp Control, and sold more than 400,000 pairs, which represented about 40% of our denim sales. We also introduced a number of new fits and styles.

In 2019, one in every five of our customers purchased denim at Express. Today, that number has increased in one in very four.

Our denim customer has tremendous lifetime value over a non-denim customer, visiting twice as frequently and spending twice as much on an annual basis. Our performance in men's knit tops significantly outpaced our total performance in the third quarter.

Our design teams have done excellent work here, and the new approach to men's graphic tees has brought a significant number of new customers to the brand, with new customers in men's tops growing by over 100% online compared to a year ago. In addition to all of these strategic assortment adjustments, our new fashion deliveries began slowing in August.

Customer response and sales results have exceeded my expectations. Now, let's turn to our second pillar, the Express brand.

Our brand purpose, to create confidence and inspire self-expression, is based on the belief that clothing can serve a higher purpose in peoples' lives. A recent article in the Wall Street Journal described the effect cloths have on how we feel and act, and the way that clothing shapes your mental state and your productivity.

This is powerful validation of the relevance of our new brand positioning. We have seen increased engagement with our marketing, increased followership in social media, and greater connectivity between our customers and our messaging.

We had a 12% increase in Instagram engagement, and a 72% increase in Facebook engagement year-over-year. To fuel our customer acquisition efforts, we focused on brand awareness building activities, and had a 13 percentage point trend improvement over Q2 in direct traffic, and a four percentage point trend improvement over Q2 in organic traffic.

We also launched the Express Dream Big Project in the third quarter. This is a purpose-driven fundraising initiative created to champion organizations that empower people to believe in themselves and follow their dreams.

We had a virtual event hosted by fashion expert and TV personality Tan France. The event drove record engagement for us, with over 3.8 billion total impressions, including over 39 million impressions across Express-owned and paid channels.

This program unifies and aligns our corporate philanthropy and employee giving in a way that is tightly connected to our brand purpose. Turning to our third pillar, customer.

To gain additional share of existing customer spend and to bring new customers into the brand, we soft re-launched our loyalty program in August, and added more new customers to the program this year than last year during the third quarter. Express Insider members have the greatest lifetime value.

They spend on average three times more than nonmembers. Their retention rate is seven times greater, and new members are nearly two-and-a-half times more likely to make a second visit within their first 90 days.

We have additional enhancements coming in the first quarter of 2021, including the expansion of loyalty tiers to incentivize and reward our best customers in more timely and engaging manner. The fourth pillar, execution, is the through-line across all of our initiatives.

During the third quarter, we focused sharply on two aspects of execution, accelerating our ecommerce business and omni-channel capabilities, and aggressively managing our liquidity through this prolonged pandemic. As I said earlier, our ecommerce transactions in the third quarter were up 17% versus a year ago, which reflects sequential quarter-over-quarter performance improvement throughout 2020.

However, revenue did not keep pace with transactions, as customers shifted to categories that drove lower average order values, but as occasions returned and people returned to work, and we progress through 2021, we expect this momentum to continue and revenues to pace closer with transactions. We added Klarna as a deferred payment alternative in mid September, and it has driven a 25% higher average order value for customers who use this option.

We expanded our digital stylist program, and this investment paid off with significantly increased demand, conversion, and average order value. We will expand this program as we move into 2021 by shifting some of our physical store associates, who have deep knowledge of our product and incredible experience working with our customers, into these roles.

We're expanding user-generated content on product display pages each week, and we see this drives conversion at double the company average. We enhanced product pages with product details and outfitting recommendations which has driven increases in both AOV and conversion.

Since the beginning of the pandemic, we have more than doubled the membership in our style trial rental service, and have successfully launched Men's. This program has achieved sustained profitability, and we see significant opportunities for future growth.

We expanded our marketplace offering to include product categories outside of our own assortment, which drove nearly $3 million in demand. We advanced our omni-channel capabilities with enhanced and expanded buy online, pick-up in store and ship from store functionality, which contribute to more efficient and more effective inventory management.

Demand has grown six times for buy online, pick-up in store, and approximately 18% of these transactions have resulted in an incremental in-store purchase and increased conversion. In addition to each of these initiatives, we will be unveiling a bold new ecommerce strategy early in 2021 that will further enhance our capabilities and make us a more advanced omni-channel retailer.

You may recall that we launched the digitally native brand UpWest just over a year ago. With a unique positioning around holistic sense of comfort, the results for UpWest have already exceeded our expectations.

In addition to our online offering, we have see promising results at our current pop-up locations and are actively growing our customer file. The brand is already performing after one full year in line with or better than other digitally native brands that have also experienced significant growth over the past several years.

So, we are really excited about its future potential. Now let's turn our attention to physical stores.

We still intend to close the 100 stores we announced in January as part of our fleet rationalization plan. We use data to make thoughtful decision, and if we decide to close more stores, that will also be the result of thoughtful data-based decisions.

Fleet rationalization is about the number of stores. Fleet optimization, which is now our focus, is about where the store should be, what type they should be, and what role they will play in our customers' lives.

So, let's talk about fleet optimization. We are testing smaller footprints in mall-based stores.

We remodeled our King of Prussia store in September, reduced its square footage by 45%, and have delivered the same sales velocity as the balance of our fleet, therefore, substantially increasing the relative productivity. We are also testing new concepts through off-mall pop-ups in Columbus and the goal to Nashville.

Branded Express Edit, these are smaller formats at 1500 and 4,500 square feet respectively with localized assortments, full customer service capabilities, enhanced fitting rooms, and styling services. We've made great progress in lease renegotiation through discussions with our landlords, and have secured $25 million in rent abetments to date.

We are in ongoing dialog with our largest mall partners, and I am confident that we will secure additional abetments and deferrals. Our strategy is working.

The response to our new fashion products that began delivering in August has been strong. Our new brand positioning is resonating and increasing engagement.

Our more streamlined go-to-market process has significantly reduced our lead times, and we are gaining momentum quarter-over-quarter in our ecommerce business. We are pulling the right levers and prioritizing and sequencing the right initiatives in order to do everything that is within our control to advance our brand, and accelerate the performance of our business.

Our long-term goal remains the same, to drive revenue by capturing market share, and achieve a mid-single digit operating margin. Perry will now review the financial details of our third quarter results and the specific actions we have taken and will continue to take to manage our liquidity.

Thank you, Tim. I'll start with our third quarter results, and then provide details on our ongoing liquidity actions.

In order to provide more transparency in our results, I'll be referring to the normal year-over-year comparisons. Now we'll also make additional quarter-over-quarter remarks where those comparisons are relevant and meaningful.

Third quarter net sales was $322 million, a 34% decrease as compared to $488 million last year. Retail sales decreased 38% and Express Factory outlet sales decreased 21%.

Third quarter comparable sales were negative 30%, including retail, a negative 33% and outlet a negative 20%. Our sales continue to be materially impacted by COVID-19 in the third quarter, as traffic continues to be pressured, especially in our retail stores, where traffic has been consistently off by nearly 50% when compared to last year.

In addition to the traffic challenges, our highly penetrated occasion based categories have also been a headwind. While our merchandise margin contracted by 1,250 basis points on a year-over-year basis, we saw sequential improvement compared to our second quarter results and also on a relative year-over-year basis and we expect these sequential improvements to continue into the fourth quarter and beyond.

Buying and occupancy expense was down $10 million on an absolute dollar basis, but the leverage by 1,130 basis points due to the decline in sales. The dollar reduction in buying and occupancy was driven by fleet our rationalization, rent savings, the organizational restructure we announced in January and incremental actions we took to manage liquidity.

It should be noted the buying and occupancy was negatively impacted by an $8.4 million non-cash impairment charge related to certain stores and store assets. During the third quarter, we had a gross profit of $14 million, with a gross margin rate of 4.3% down approximately 2,400 basis points as compared to the prior-year driven by the sales decline.

However, compared to the second quarter, our gross margin improved on an absolute basis and also on a relative year-over-year basis due to higher total sales, therefore improvement in merchandise margins and improvement in our buying and occupancy rates. SG&A expenses were $125 million, a decrease of $19 million compared to last year.

Similar to the buying and occupancy reduction, the reduction in SG&A expenses were driven by our fleet rationalization, the previously announced cost reductions associated with our corporate restructuring and the actions we took as part of our COVID-19 savings. As a percentage of sales, SG&A came in at 38.8% de-leveraged 930 basis points as a result of a significant decline in sales.

On a GAAP basis, our operating loss was $111 million as compared to last year's operating loss of $7 million. Excluding the impact of the previously mentioned non-cash impairment charges, our adjusted operating loss for the third quarter was $103 million as compared to last year's adjusted operating loss of $5 million.

Third quarter diluted loss per share was $1.39 on a GAAP basis, compared to a loss of $0.05 per diluted share in the third quarter of 2019. Our effective tax rate for the third quarter was 19.2%.

This reflects the valuation allowance recorded against our deferred tax assets. We ended the quarter with $107 million worth of cash and cash equivalents as compared to last year's $168 million.

Our cash position reflects the COVID-19 mitigation actions we have realized to-date which included previously mentioned actions to reduce expenses and improve liquidity. These liquidity measures include, but will not be limited to join down in our ABL, inventory cuts, [technical difficulty] and capital expenditure reductions.

In addition to these actions, we're also pursuing additional financing to provide flexibility in managing our liquidity. Inventories were $351 million, a 1% increase as compared to last year's $346 million.

This increase was driven by continued pressure on sales from the pandemic. Our decision to shift $10 million of inventory from November to October in anticipation of an earlier start to the holiday shopping season, and we're holding $5 million in select products that we will ship to our outlet channel next year.

Excluding this unit, our inventory would have been down 3% at the end of the third quarter. We're pleased with the work we have completed over the past year to improve the health and composition of our inventory.

Since the pandemic begun, the actions would have taken along with the expected benefits of the CARES Act have generated approximately $550 million of liquidity with approximately $440 million in 2020 and an additional $110 million in 2021. For 2020, approximately $280 million was realized in the first-half, $115 million during the third quarter with the remainder expected in the fourth quarter.

To provide more color on the CARES Act, we expect the majority of benefits to materialize in 2021, as we cut it back 2020 losses to prior textures. Our balance sheet currently reflects $112 million of income tax receivable, of which approximately $95 million is expected to be received in Q2 of next year.

In summary, based on the actions we have taken, and we will continue to take in response to the pandemic, the relative strength of our e-commerce business and continued strong response to our fashion receipts were well positioned for improvements results going forward and ultimately to achieve our long-term goal of single-digit operating margin. I look forward to updating you on our progress next quarter.

I will now turn the call back to Tim.

Thanks, Perry. The EXPRESSway Forward strategy is working.

The changes we have made to the design and merchandising of our product, the positioning and messaging of our brand, the way in which we are engaging our customers, and our operating model are all working in concert to move us in the right direction. While we pay careful attention to the macro environment, and certainly the environment over these last many months has been unlike any other, the executive leadership team and I have remained focused on controlling the controllables across product, brand, customer, and execution.

We're advancing on the EXPRESSway Forward and our destination remains the same to drive revenue by capturing market share and achieve a mid single-digit operating margin. Let me recap, 10 key takeaways from today's call.

We identified over $440 million in liquidity actions in 2020, and we are also pursuing additional financing to provide flexibility in managing our liquidity going forward. We expect to receive $95 million in the second quarter of 2021 as a part of the CARES Act.

Our new fashion deliveries, which fully reflect the Express viewpoint, have outpaced the balance of our assortment. We saw increased engagement with our marketing.

We added more new customers to our loyalty program this year than last year in the third quarter. We enhanced our omni-channel capabilities and demand has grown six times for buy online pick-up in-store.

18% of these transactions have resulted in an incremental in-store purchase and increase conversion. We drove a 17% increase in online transactions in the third quarter.

Conversion in the third quarter was up double digits across each of our channels. We completed an additional 10% reduction in our corporate workforce, and finally, we will be unveiling a bold new e-commerce strategy early in 2021.

I am proud of the way this team has stayed on track and continued to execute against our strategy while navigating this prolonged pandemic and highly unusual environment. Let me wish all of you a very happy, very safe, and perhaps this year, more than ever, a very healthy holiday season.

And now, we'll take the first question.

Hey, guys. It's nice to see some of the progress on the fashion in the stores.

Could you talk a little bit, I guess, pre this most recent surge in COVID, were you beginning to see your shopper, because you have a younger shopper who is a little bit more out and about. Were you starting to see your shopper come back a little bit more for some of the dress and fashion items?

And have you seen, as COVID has surged, changes regionally in how sales and traffic have changed?

Yes, good morning, Marni. Yes, the answer to your question is yes.

There is certainly a correlation to where we see surges in COVID and the performance of our stores specifically in those markets, and the first part of your question, the answer is also yes. We have seen in, particularly in some specific markets some -- great success.

I mean, as I said, the fashion product has exceeded my expectations, exceeded all of our expectations, and in those particular areas more occasion-based product is actually selling -- outpacing other areas where there are surges. So yes, we are seeing that.

That's fantastic, and then, could you also talk a little bit about even within the product that's a little bit more casual, are you seeing good reaction to things what I would call fashion casuals, so your embellished sweaters and fleece, and things like that, as opposed to just the basic fleece or it is all across all of casual?

Well, I would say all of causal is clearly performing better right now than our historically big categories of more dressed up product, but when we embarked on this transformation I made a bold statement that we were going to get back to fashion leadership in the United States, and that is happening. Our customer is absolutely responding to the fashion product in a way that, as I said, has exceeded our expectations.

So when you look at the casual product, the fashion product is absolutely selling through at a much higher rate. In fact, I wish we had more depth in some of that high fashion product, so yes.

And particularly the product that you mentioned, the embellished sweatshirts and embellished loungewear has been fantastic, absolutely fantastic. So it is very clear that our customer, as we emerge from this, is going to respond extraordinarily well to the fashion product, and that our core categories will gain momentum, and we'll get that balance back.

Fantastic. Best of luck with the rest of the holiday season.

Thank you, Marni.

Hi, good morning, and thanks for taking my question. I was wondering if you could maybe give some color on just how November played our relative to October, and then also within November, I guess, how was the Black Friday week versus the rest of the month?

I guess we're just hearing it was kind of pressured just given the store capacity constraints. Thanks.

Yes, well, I would say, Susan, we don't typically comment intra quarter, but I will. These are -- but I'll qualify what I'm about to say with, these are extraordinarily uncertain times, and we see huge variations in trends based on what's happening.

It's like I said to Marni, where you see surges, there is definitely a correlation between surges and restrictions, and how our stores perform in those regions, but I would say that November was very consistent with what we saw in the third quarter, and Black Friday was very consistent with what you've read, and what has been said. It's worth reminding everyone that stores were open last year -- most of our stores were open last year on Thursday, on Thanksgiving, and none of them were opened on Thursday this year.

So obviously, in addition to the fact that reduced hours have been a challenge for us, that's a full day that -- not a full day, but an afternoon and evening that we were closed -- that we were open a year ago that we were closed this year, so obviously had a negative impact.

Got it, okay, that's really helpful, and then maybe could you give some more color just on the merch margin in third quarter, and how promotional you were in third quarter versus your expectations? And then also what you're expecting for fourth quarter, the promotional environment and your merch margin?

Hi, Susan. From a merchandise margin standpoint, in the third quarter, we're down [indiscernible] basis points, and obviously this was impacted by the overall promotional environment due to COVID as well as increased promotions in the back-half of the quarter due to the early start of the holiday season.

The other factors that have impacted the merchandise margin is the overall increase in the online variable transactions due to the impact on our overall AOB that was discussed before. Overall, the Q3 promotional environment was pretty intense, and it was higher than initially anticipated.

As we move into Q4, we're expecting to see continued improvement on a relative basis between Q4 of this year versus Q4 last year compared to, obviously, what happened in Q3, but we do expect the overall environment to continue to be very promotional.

Okay, great, that's helpful, and then I guess lastly, I know you talked about some certain products, such as the men's polos, that were selling well. I guess I'm just kind of curious, I don't know if you could talk about, and just in terms sales growth or not, those categories or products that were doing much better relative to the rest of the group such as like maybe the casual lounge, and then if you could talk about how denim was doing versus the workwear just to kind of get a better idea of the products that were potentially selling better than those that obviously the consumers are not interested in right now?

Yes, you sort of nailed the categories that are selling much better. In my comments I talked a lot about denim, and we have weeks where we are actually posting positive comps in denim.

It's tough to offset what's happening in stores right now given the high penetration of stores to our business, but our denim business is very, very strong. Our business in casual and lounge particularly when it's done in our way, in a fashion way, as I said with Marni is fantastic, really good sell-throughs significantly outpacing the performance of other categories.

Men's knits in particular, as I said, driving positive comps by the time we got to the end of the third quarter, and feeling confident about our ability to continue to drive men's knits very aggressively, and really importantly, particularly as we are moving into the fourth quarter, our sweater business has outpaced the performance of the total business pretty significantly too, and I would also note that even within sweaters we're certainly selling what I would describe as cozy and comfy and loungy sweaters, but our embellished sweaters have also been fantastic, which I guess makes perfect sense given that many celebrations this year are going to be much more at-home celebrations.

Great, that's helpful. Thanks so much.

Good luck this holiday.

Thank you.

Great, thanks. Good morning.

My first question is on inventory. I was just wondering if you can help us better appreciate the composition of your inventory, where you expect them to end at the end of 4Q, and whether the spread in inventory versus sales you think will result in a continued significant degradation of merch margin in the 4Q?

Thanks a lot.

Hi, Roxanne. So, from an inventory standpoint we have done a good job managing our inventory throughout the year, including faster liquidation of underperforming inventory and improving our overall inventory composition.

In Q1, our inventory went down 6%, Q2 was down 14% and in Q3, we ended up 1%. The increase in inventory is driven by the continued pressures that we have seen on sales from the pandemic, and our decision to pull forward inventory from November into October of about $10 million, as well as about $5 million of inventory that is packed and held for the outlook business.

When you look at the overall inventory composition, this time -- this year versus last year, our inventory composition is much better, and it reflects the Express Edit point of view from a merchandise standpoint. As I said earlier, we expect as we move on into Q4 to continue to see improvements on the relative basis on our merchandise margin as you know, Q4 is always extremely promotional time, but we do expect that we're going to continue to see improvements as it relates to your, I think one part of your question was, where do we expect inventory to be at the end of Q4, we expect inventory at the end of Q4 to be up, and that is a matter of performance from a sales standpoint, where it's going to exactly be.

Roxanne, it's important to note here from my perspective that, while in my comments, I talked about cancellation of hundreds of thousands of units in categories, like Men's suits, Men's dress shirts, those are our largest categories in there, and as we continue to see steep declines in those categories, we own more inventory, even with those cancellations than I'd like, but the composition of that inventory is good. It's not inventory that is going to require aggressive markdowns, we're talking about navy and black and gray suits, and white and black and blue men's dress shirts.

So from a health of the inventory, we feel good about the health of the inventory and the composition of the inventory, even though obviously, we'd like to have less inventory in some of those key categories right now.

Okay, thanks. That color was certainly helpful, and then I guess, as it relates to the testing of our new smaller store format, I'm curious to know, what categories and skews you are reducing to represent kind of an Express new store model, and then, when you think about the opportunity there to roll out smaller stores.

I know that over the last few years, you've renegotiated leases, and I'm assuming that you've got a good chunk of your stores that may actually be locked in and perhaps unable to relocate. So I'm just wondering if you could talk about the opportunity within your fleet.

At this point, what percent you're able to maybe pursue in terms of a smaller store? Thanks.

So, great question. Thanks, Roxanne.

We still have a lot of flexibility within our mall based fleet, so as we have renegotiated leases, you may recall that we have renegotiated them on much shorter terms than what have historically been the terms of these leases, in order to maintain flexibility with our fleet. So, over 60% of our fleet is still actionable over the next few years, because of those shorter lease terms.

So, the King of Prussia example that I gave is really encouraging to me because, we have proven that we can dramatically improve our productivity in a smaller format within the mall, but what's I think, more interesting and certainly going to be more relevant part of our strategy as we go forward, is these smaller format off-mall locations that we have just begun to test, the one that we're opening here in Columbus, which is about 1,500 square feet. So, obviously substantially smaller than any existing Express Store actually opens tomorrow and our approach with these smaller stores is actually an approach of learning.

So, we'll be assorting them in different ways, at different times, actually just to see where we get the most traction, and it'll certainly be our intent to localize the assortments, so the store that we're opening up tomorrow hearing Columbus is actually going to be very gift focused. So it'll have a very holiday field, and then as we move out of a holiday, we will shift our focus to be a fashion forward focus for spring, but obviously very edited assortment, but we're also testing really exciting things like styling services in these locations.

So, here in Columbus, our Eastern Flagship store is just a short distance away from this new smaller store. So, a customer will be able to make an appointment to meet with a stylist, and that stylist will be able to pull whatever product they believe that customer may like from that Eastern store and have it available for the customer to try on at a styling appointment in the smaller format store in Upper Arlington.

Great.

We'll be testing a whole bunch of different things with those smaller format stores.

Great. Well, we look forward to hearing more about that.

Sounds like an exciting opportunity, and best of luck for holiday.

Great, thank you.

Hi, there. Thank you.

Tim, could you address a little bit the liquidity situation, and just want to feel comfortable what the balance sheet is going to look like, and with the liquidity position is going to look back kind of in the March-April timeframe for next year, just to make sure you guys are still okay by the time we get there?

Yes, absolutely, Tony. Thanks for the question, but what I would say is, we have clearly been effective managing our liquidity throughout this very prolonged pandemic, and we still have a number of levers available to us to continue managing our liquidity, including as I said in the script, and as Perry mentioned, potentially new financing opportunities, but also additional abatement and deferral, as we continue to negotiate with our landlords, and obviously we continue to look for and address any opportunity for cost savings, inventory reductions.

So, I'm very confident in our ability to continue effectively managing our liquidity just as we have throughout the year.

It looks like you're going through like $50 million, $60 million of cash a quarter, is that about right?

Yes, as you know, our working capital fluctuates all the year. So, obviously that would depend on the time of the year and many other variables that will impact the cash burn.

Obviously sales is a factor you know, that is part of that.

Okay. Well, I would think comparisons get a lot easier starting in February or March of next year.

Yes, they most certainly will.

Yes.

Good luck.

That's about the only thing that's certain right now.