Reopening Responses Reflect Cautious Optimism

After months of lockdown orders, all 50 states and many countries have begun the reopening process. Alongside the lifted travel restrictions, local governments are issuing guidelines for businesses to begin opening their offices and stores to employees and customers. What trends are companies seeing as global economies begin to reopen? We’ve compiled commentary highlights from the past week of conferences below.

 

Takeaways:

• PVH Corp said that they’re experiencing strong conversion and higher units per transaction in stores and lower overall traffic trends
• Guess shared that they have gained momentum and same-store sales in Asia for Q2 to date and are running at 75% of last year’s sales productivity
• Genesco stated that reopen store sales have been running at less than half of last year’s level so far
• Oxford Industries mentioned that they don’t expect to close down a lot of stores, but they will take this opportunity to reassess some locations
• Dollarama is seeing caution in consumers with people coming in less frequently, but buying more at one time

 

AlphaSense can track emerging trends in real-time by industry, watchlist, and across the market. We expect this to be an interesting theme to follow as countries plan to reopen. Start your free trial of AlphaSense now or login to your account.

 

Q2 2020 FuelCell Energy Inc Earnings Call – 6/12

We have remained in contact with global team members, suppliers and customers to share information and minimize interruptions to our business plan as much as possible. Now that efforts are underway to reopen society under a controlled plan, we are planning to begin reopening our Torrington, Connecticut manufacturing facility on June 22. While the shutdown of our manufacturing facility was in effect, we continued the construction of our 7.4 megawatt project at the Navy Submarine Brace in Groton, Connecticut, and commenced construction at the San Bernadino Biofuel project.

We will utilize a staggered approach to reopen our offices, and we will continue to remain in compliance with all rules and regulations, including continued use of social distancing protocols and work from home where possible. We have secured the necessary PPE for all of our team members, and we have modified workspaces to promote social distancing. Of course, we will continue to monitor the situation and adjust our operations as necessary.

Q1 2020 PVH Corp Earnings Call – 6/12

Starting with Asia and China, they have provided us with the best learnings for the recovery phase in our other regions. Currently, all of our stores in China are open. Since China started to reopen, we have been strong week-over-week improvements across the board. For example, our reopened stores are now approximately flat to last year and our digital business up triple digits for both Calvin and Tommy. We’re experiencing very strong conversion and higher units per transaction in stores and lower overall traffic trends. To drive transactions during the store closures, we offered virtual client telling and engaged with shoppers through WeChat. We livestreamed our brands to connect with consumers which led to significant sales growth versus a typical day.

Then Europe follow closely after Asia, where we have also seen strong week-over-week improvements. Currently, about 85% of our stores are open and trends are very encouraging. We’re planning for the U.K. market to reopen early next week. As we reopen stores, we have experienced strong conversion and favorable full price trends with less promotions than planned. We have faced lower overall traffic trends that have improved more in smaller cities versus big cities as consumers are shopping closer to home. We have applied a data-driven approach to be able to offer targeted promotions to increase sellouts while also keeping margins relatively stable.

Overall, we believe that Europe’s recovery will be about one calendar quarter behind the trends we’re seeing in China. For wholesale, our full order books that were up mid-teens pre-COVID are now down low to mid-teens for each of our brands as we work with our partners to consolidate product sites to better match demand and to end the year as clean on inventory as possible.

And lastly, in North America, stores here were the latest to reopen, and we will be at 85% reopen by next week. We are pleased to see how the consumers are coming back. In our own stores, small doors are performing very well. Our domestic consumers are over indexing, and it will be critical to target that domestic consumer for the remainder of the year as international consumers are traveling much as, and we don’t expect this trend to materially improve this year.

 

Preliminary Q1 2021 Hooker Furniture Corp Earnings Call – 6/12

Answer – Paul B. Toms: Right. I think the Northeast and maybe the upper Midwest, even the northwest may be slower reopening and parts of the south or the west. But it’s really hard to — I mean, we can look at our traditional customers and kind of know where the sales are. But when you get into e-com and catalogs, plugs, it’s really harder to know exactly where furniture ends up in this region. So — but I think you could probably be safe to say, certainly, on the Hooker Branded as well as the domestic upholstery segment that we are more concentrated in the southern parts of the country, the south, I’d say, we’re in Texas, the Oklahoma, the Sunbelt than we are in the Northeast. But we have a very good presence in the Northeast. I think for some of the other channels of distribution and probably for through Home Meridian than we do through the other 2 segments.

Q2 2020 Currency Exchange International Corp Earnings Call – 6/12

Answer – Randolph W. Pinna: Well, unfortunately, yes, it’s on the hold. As you know, the border is closed. So unfortunately, most of their stores also the Buffalo store, there’s 2 or 3 that are reopening as we speak. But they did the Phase 2 and Phase 3 was paused, not because of any problem with our relationship, it’s just that they’ve been hit, I think, even harder than us because their customers are all foreigners. And then the fact that they’re on the borders and border is closed, they are really impacted. And so the CEO and their senior management team had paused, but we were just talking to them last week, and it looks as if Phase 3 will come before Phase 2, which is the Mexican border and then the Phase 2 is the other locations they have and that is less — that’s not a priority. The Mexican border is still open, and so that is likely to start happening this summer.

Q1 2020 Party City Holdco Inc Earnings Call – 6/12

For our outlook, given the uncertainty around the duration and trajectory of the COVID-19 related disruption, please note that we’re not providing additional outlook for 2020 today. However, we thought it would be helpful to provide some data points for quarter to date. As Brad mentioned, we are reopening stores through a phased and measured approach with increased sanitation protocols. Our reopenings has been heavily concentrated in the last weeks of May, and we’re encouraged by the initial reopening results we’ve seen.

Sales at reopened stores, including buy online, pick up in-store, are at approximately 80% of corresponding prior year volumes on average. Our e-commerce business, including BOPIS, generated record performance for the duration of our store closures and continues to deliver strong performance in this early phase of reopening. Given the loss of store operating days for all of April and most of May, overall retail comparable sales trends through June 7 are down approximately 70% with wholesale third-party sales declining directionally consistent with this number.

Q1 2021 Christopher & Banks Corp Earnings Call – 6/12

Where we stand today? As of today, we have opened 90% of our store base through a phased reopening plan based on state and local guidelines and in adherence to health and safety measures. We began with a very small number of stores at the end of April and accelerated openings throughout May. We are pleased to see sales volumes building to our expectations. As I mentioned earlier, our eCommerce business has really accelerated. We have not experienced the slowdown in growth since we have opened our stores, and we believe it will continue to grow at a high rate as a result of the continued enhancements we’ve made in our omnichannel capabilities.

Q1 2020 Dave & Buster’s Entertainment Inc Earnings Call – 6/12

First, reopening our stores. Our store reopening process starts with a careful evaluation of state and local restrictions as it relates to guest capacity and hours of operations. And based on a scaled down operating model, a store must have the initial potential to generate between 10% to 20% of it’s 2019 revenues in order to generate a variable profit. We set hours of operation for each store based on pre-COVID high-volume days and dayparts in tandem with state-mandated limitations. And for those stores that are open as of this week, we are currently operating at an average of 60 hours a week or roughly 65% of our pre-COVID average weekly operating hours. More importantly, those 60 hours generated about 90% of our pre-COVID revenue. So we are deliberately focusing operations in our most productive times.

Q1 2020 Lululemon Athletica Inc Earnings Call – 6/11

Answer – Meghan Frank: Great. Thanks, John. It’s Meghan. We have approximately 60% of our stores open at this point globally. 100% in Australia and New Zealand, 95% in Asia, 60% in Europe and 50% in North America. We do expect that we’ll open almost 100% of our stores by the end of June. If we think about the productivity we’re seeing within those stores, as Calvin mentioned, in the initial weeks, we’ve seen some variability. It’s still very early, but we’re seeing that in the range of 75% to over 100% of last year’s productivity. And at the same time, we’ve seen our e-commerce business accelerate in early weeks of the quarter. As I shared, we expect total revenue to improve in Q2 to a high single-digit decline. And we expect e-comm for the quarter to grow at approximately 125%. So moderating throughout the quarter as stores ramp and reopen.

Fleetcor Technologies Inc at RBC Financial Technology Conference (Virtual) – 6/11

So as you saw in the disclosure back in May for our April volumes, that part of the business was down 20% to 25%. So 75%, 80% of those customers continue to travel because those are true blue-collar guys. Staying in hotel rooms is part of their job. They cannot work from home. So it held up really well. It’s starting to tick up little by little as states start to reopen and folks start to get back on the road, but that may take a little bit longer just as projects are paused and as those customers wait a little bit to see what demand was going to look like going forward.

Q1 2020 Childrens Place Inc Earnings Call – 6/11

Answer – Michael Scarpa: We expect that by the end of the second quarter, we’ll be probably in the 100 store range of closures. So half of them will take place in the ensuing 1.5 months. We expect that a good portion of them will open and liquidate, and then we’ll close depending on the inventories that are left in the store, if there are ship-from-store activities. You had another question?

Planet Fitness Inc at William Blair Growth Stock Conference – 6/11

Answer – Christopher J. Rondeau: Yes. We really haven’t. So the national ad fund, the 2%, because we weren’t billing members, there wasn’t no ad fund coming in. And until we have the majority — vast majority of the stores open in all the 50 states, you won’t see any big national promos. So we’ll see open stores and all the states start opening up. So my guess, by the end of summer, hopefully, or beginning of September. So you maybe see a big natural push there. Now on a local level, out of these 38 states that we’re open in, 11 or 12 states were open 100% of the stores in. So in those big DMAs, where we have all the stores open, you’ll begin to see the 7% local spend begin to work probably in the next couple of weeks here and begin to build members and at least collect their 7%. And they do the marketing co-ops, which we’ve talked about, where we take a DMA like Atlanta, which might have 40 stores and they all contribute to the local marketing co-op and they do big marketing, marketing pushes that way. Outside of national promotions, and that’s not — it’s a very common anyway. But you’ll begin to see that probably a couple of weeks. But if you look in that area, you would almost assume that isn’t national because they’ll buy syndicated ABC. They’ll be on cable networks. I mean it’s a big spend. So I mean 7% is most of it, right? So you’ll see — again to see that here shortly, but we haven’t done anything yet, which is even more encouraging because the joins have been coming in ahead of last year

Q1 2020 Oxford Industries Inc Earnings Call – 6/11

I think that we probably, over time, are going to see less people in stores. But when they get there, they’re going to be more committed to buying. They’re going to have done their research in advance. They’re going to be looking for the expertise in the service of our great staff in the stores. And it may end up physically changing the way that we want to layout those stores and the size of them. But I don’t know that we’ve drawn any hard conclusions about that. And then in terms of store count, one of the things that I think was a strength going into this shutdown is that we were not overstored. We didn’t have a lot of stores that were marginal. So while this situation has definitely put pressure on things, I don’t expect to close down a lot of stores as a result of this, I can’t say that there won’t be a small handful, but that won’t reopen, but I don’t think we’ll close down a lot of stores in the short term.

Q2 2020 Transcontinental Inc Earnings Call – 6/10

Answer – François Olivier: No, no, no. They are clearly tied up to the reopening of the economy. Some of the industrial product that we do are raw material that are, let’s say, part of the construction industry. So as the construction industry reopen and people start to rebuild houses and building, then this business is going to pick up again. So it’s totally linked to the opening — the economy reopening. That 20% is what we call industrial base. It’s on industrial products. So as plants and the construction business is going to reopen, this business is going to restart. So this business has not stopped. But obviously, a lot of the industry that we’re servicing there has been slowdown or operate at a reduced rate. So obviously, Packaging is at a reduced rate, but we don’t have a lot of customers that have — that are not in operation right now, but they are working through inventory. A lot of our customer at the beginning were concerned with inventory. So they pass big order to us to be secure and a lot of our customer now with the reopening of their industry, are working through this inventory and are going to start to reorder soon. So it’s clearly linked to the economy reopening and the less the economy will reopen, the more this business will stay challenged or like below last year, and the more the economy will reopen, the more it will go back to normal.

Q1 2021 Dollarama Inc Earnings Call – 6/10

Answer – Neil Rossy: Well, we’ve just reopened, as we mentioned, some of the mall stores. During Q1, we — the last time we spoke in Q4, at that time, we announced 55 closures. That went up during the quarter to 104-ish. And now is back down to 32. So one, for those stores that are reopening, you’ve got some positive traffic kicking back in, obviously. But I mean, it’s a slow pickup, where we’re just beginning to see that. But I think people are still — what we see is still caution. In other words, people not coming as often, but buying more at a time. I think those are the — what we’re seeing right now.

Starbucks Corp at Stifel Cross Sector Insight Conference (Virtual) – 6/10

Answer – Patrick J. Grismer: We could not be more pleased with how the business in China has been recovering. Of course, the first step of that was rapidly reopening stores as market conditions and government guidelines would allow and pivoting quickly to accommodate customers’ new expectations around physical distancing. So the team moved quickly to accommodate customers how they wanted to be met, and that included dialing up our focus on Mobile Order & Pay and the mobile order for delivery. So as we mentioned in our 8-K, we saw nice improvement compared to pre-COVID-19 levels that appear to be fairly sticky in terms of the extent to which consumers are pivoting to more of a Mobile Order & Pay or mobile order for delivery experience. So we’re pleased with how the team has pivoted in that regard.

Six Flags Entertainment Corp at William Blair Growth Stock Conference – 6/10

Answer – Leonard A. Russ: Sure. So as many people have read, most state and local authorities are limiting capacities at most businesses when they first initially reopened to about 25%. So we’ve kind of built that into our opening plans that we would open at those reduced capacities as we initially open our parks. And that 25% is really based on kind of a design day capacity. So what is kind of a peak demand that you would see for a park for a good fun environment for our guests, as well as looking at what is a safe social distancing capacity, looking at each person needing 36 square feet to ensure that they’re kind of in that 6-foot parameter, kind of limiting factor that we’ve all been listening to and hearing about since the pandemic began. We’ll be able to gradually increase our capacities as we learn more. We’re opening our parks really with a dress rehearsal kind of mentality, where we’re opening it less than those 25% capacity to ensure that we get the learnings under our belt and we can make adjustments before we kind of increase to the 25% and eventually 50% more from a capacity standpoint.

Target Corp Annual Shareholders Meeting – 6/10

Now I’ll turn to our shareholder question about the impact to our stores from recent events. Over the last couple of weeks, we’ve had to temporarily close hundreds of stores and reduced hours and others due to our continued focus on team member safety. I am very happy to say that all of our store team members have remained safe during this period of unrest.

Beyond those temporary closures, which are largely behind us, we have 7 stores that sustained significant property damage. Four of those stores are expected to reopen by the end of this month. The other 3 will remain closed until we can repair the damage. The most significant damage occurred in our Lake Street store in Minneapolis, which we will rebuild and reopen as soon as we can, which is hopefully by the end of this year.

And as I mentioned in my remarks, we’ve taken other steps to provide the needed food and supplies to the neighborhood in the meantime. But I want to make sure it’s really clear. We’re committed to rebuilding and reopening all of these stores as soon as we can. 

Q1 2021 Guess Inc Earnings Call – 6/10

In April, as we began to reopen these locations, we experienced a significant drop in customer traffic but a meaningful improvement in conversion rates, resulting in a materially lower sales productivity compared to last year. But since then, we have gained momentum and same-store sales in Asia for Q2 to date are running at 75% of last year’s sales productivity, a significant improvement. Regarding North America and Europe, by mid-March, we decided to temporarily close most of our stores in both regions. At present, we have reopened over 400 stores in Europe and over 180 stores in the U.S. and Canada, with operations resuming over the course of mid-April to June. As we experienced in China, in these stores, we have seen slow customer traffic, partially offset by improved conversion rates. I’m thrilled to report that most reopened stores are performing better than we anticipated resulting in a quarter-to-date sales productivity of roughly 75% in the U.S. and Canada and 70% in Europe as compared to last year’s levels. As you would expect, stores that depend on local customer demand have performed better than those that depend on tourism as nobody is traveling now.

Q1 2020 Red Robin Gourmet Burgers Inc Earnings Call – 6/10

We have also implemented new social distancing measures by rearranging our dining rooms and posting signage and marking tables that cannot be used. With these measures in place, we are confident that we’re delivering the high-quality food and great experience that Red Robin is known for in a safe manner. We’re opening restaurants at a maximum of 50% capacity, which, in some cases, are more stringent than what restaurants are being mandated to do by state or local jurisdictions. Concurrently, we are completing our work around how to open dining rooms at 75% capacity with social distancing intact, so that we could open at this increased capacity with appropriate health and safety protocols.

Importantly, as of the week ended June 7, restaurants with open dining rooms generated comp sales of down 26.7% compared to comp sales generated at restaurants only offering off-premise of down 56.0%, a positive difference of 29.3 percentage points.

Wyndham Destinations Inc at Stifel Cross Sector Insight Conference (Virtual) – 6/10

Number one is, if you’re going to a beach, you’re very likely to take your reservation or you’re booking and go on your vacation. Our arrivals have been pretty much as we’ve expected. And Central Florida, Orlando, we’ve had more no-shows or lower arrivals than we anticipated. I don’t think that should — well, it was a little bit of a surprise to us, but with Disney not reopening until July, the theme parks not reopening until really the first, second week of June, the amenities are going to attract people to Orlando. So probably trend wise, you saw a little lower than expected there but at expectation in the other locations.

Q1 2020 AMC Entertainment Holdings Inc Earnings Call – 6/9

Having said that, we have some — we have about 50-or-so theaters that we own in the United States, where we don’t even — where there are no theater leases. If any of those theaters are unprofitable, they may not reopen. I’m expecting that we’re going to open up 97%, 98% of our U.S. theaters in July, but I wouldn’t be surprised if a couple of percentage points — maybe 96%, if a couple of percentage points of our theaters we choose not to reopen because their profitability is marginal. Over time, meaning looking ahead, not just the next 90, 180 days but looking into ’21 and ’22 and ’23, we’re going to have to take a very hard look especially as theaters come up for normal lease expiration. And we’re going to go through an exhaustive analysis of every single theater and make the determination whether that theater stays in our fleet or it leaves our fleet or it only stays in our fleet if we can renegotiate terms with a landlord such that rents are more affordable going forward on a, let’s say, 5-year contractual extension. I don’t see anything that’s going to decrease our theater count that would have us fall below being the largest theater operator in the United States. Having said that, I don’t think we’ll be at 635 theaters either because we are going to take a very hard look at profitability and we want to run those theaters that are contributing to overhead and shedding those theaters that are not.

Nordstrom Inc at Cowen Virtual Department Store Summit – 6/9

Answer – Erik B. Nordstrom: Sure. Right now we have about 40% of our store fleet open. That includes full-line stores and Rack stores. This is a big week for us. We open 118 stores this week. That will get us to about 75% of our stores. So it’s — and in general, that 40% was more focused on smaller markets than our biggest markets.

So I would be a little cautious in making too much out of small sampling, but I would tell you that our results are ahead of expectations. Our Rack results are a bit stronger than our full-line store results at this point. And we are seeing improvement sequentially over the weeks that we are seeing things improve.

Macy’s Inc at Cowen Virtual Department Store Summit – 6/9

Answer – Jeffrey Gennette: Yes. They’re — so as we’ve reported, Oliver, we — when you look at — we expected stores to be down between 80% and 85%, which is really how we modeled it based on how other countries had opened up. And as you’re hearing from all of retail in America, it’s opened up much better than that. So we opened up — our average is down about 50% as we opened, and it’s pretty broad-based when you look at it

The first tranche of stores that we opened were May 4, and they opened around that number. Then, we opened another tranche on May 11. And really, this week, you’re going to see us open with about 400 and — a little over 400 stores will be fully opened. And each tranche that we’re opening up is opening up a little better. And each week that they’re open, they’re getting a little bit better. So I would tell you that we’re quite pleased with that.

And as we also reported, to your question, the digital business, which has been quite strong, we’re up 80% in the month of May — or we’re up 80% in the month of May. The trend of that modulates a little bit as those stores have been open about 2 weeks. You start to see a declivity in that rate. So we don’t expect that 80% to hold as all stores open going into the back half of the year, but we expect it to continue strong.

Kohls Corp at Cowen Virtual Department Store Summit – 6/9

Answer – Jill Timm: Sure. From a margin perspective, I would definitely say Q1 is our low point. You saw, as we reconciled, we took some inventory actions that obviously had a large impact to our gross margin. That helped us feel very clean with how we address the inventory, especially with the establishment, for the first time, of a lower cost-to-market reserve. The 2 pieces, I think, that you’ll see persisting, Oliver, is, one, the cost of shipping. As Michelle mentioned, our digital business continues to outperform up almost 90% in May. So we know that, that will be a heightened penetration. So we’ll see those headwinds continue. And then as we just talked about, we do expect the promotional activity to be heightened, and we will participate in that, which will also weigh in on the margin, but you will see it improve from Q1.

Q1 2021 Genesco Inc Earnings Call – 6/9

Reopen store sales have been running at less than half of last year’s level so far. And while J&M, historically, enjoys a larger penetration of e-commerce sales, the gains during the quarantine have not been as pronounced as we’ve seen in our teen and used businesses. As was the case prior to the pandemic, casual footwear and apparel continued to drive J&M sales, as working from home and sheltering in place has temporarily reduced the need for dressier product.

With respect to Schuh, it’s too early for a read since only a few stores have been open for a few days. The U.K. has been slower to open than the U.S. and is opening with a greater number of restrictions. June 15 is a key date when England allows stores to reopen, and we expect to have over 2/3 of our fleet up and running then. With best-in-class e-commerce capabilities, Schuh has been the most successful of our businesses, capturing some of the lost store sales over the past 2 plus months, albeit through heavy promotional activity to match the U.K. competition. Like Journeys, women’s and kids sales have been most brisk.