Ladies and gentlemen, thank you for standing by and welcome to the Lands' End Second Quarter 2020 Earnings Call. At this time, all participants' lines are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. [Operator Instructions] I would now like to hand the conference over to your speaker today, Bernard McCracken, Chief Accounting Officer. Please go ahead.

Good morning, and thank you for joining the Lands' End earnings call for a discussion of our second quarter fiscal 2020 results, which we released this morning and can be found on our website landsend.com. On the call today, you will hear from Jerome Griffith, our Chief Executive Officer and President; and Jim Gooch, our Chief Operating Officer and Chief Financial Officer. After the Company's prepared remarks, we will conduct a question-and-answer session. Please also note that the information we're about to discuss includes forward-looking statements. Such statements involve risks and uncertainties. The Company's actual results could differ materially from those discussed on this call. Factors that could contribute to such differences include, but are not limited to those items noted and included in the Company's SEC filings, including our annual report on Form 10-K, quarterly reports on Form 10-Q, and Form 8-K dated June 2020. The forward-looking information that is provided by the Company on this call represents the Company's outlook as of today and we do not undertake any obligation to update forward-looking statements made by us. Subsequent events and developments may cause the Company's outlook to change. Of note, in this respect, the COVID-19 pandemic continues to have a significant impact on our business and its duration can materially alter our outlook. During this call, we'll be referring to non-GAAP measures. These non-GAAP measures are not prepared in accordance with generally accepted accounting principles. A reconciliation of non-GAAP financial measures to the most directly comparable GAAP measures can be found in our earnings release issued earlier today, a copy of which is posted in the Investor Relations section of our website at landsend.com. With that, I will turn the call over to Jerome Griffith.

Thank you, Bernie. Good morning and thank you for joining our second quarter earnings conference call. I hope that you and your families remain safe and healthy. Before we begin, I want to extend my deepest gratitude to all of our team members for their hard work and contributions as we continue to navigate this highly complex and challenging environment. Looking at our business, since I joined Land's End in the spring of 2017, we prioritized investments and resources that would enable us to capitalize on our eCommerce-led organization. We focused on product assortment through our key item strategy, data analytics capabilities, our global eCommerce platform including websites presentation and functionality, marketing strategies, and business processes and infrastructure. The work we have done across these areas enabled us to drive momentum in our global eCommerce business and delivered strong growth in the second quarter of 2020. We remain well positioned to manage through the challenges presented by COVID-19 and to deliver long-term profitable growth when we emerge from this crisis. My confidence is due to several factors. First, our organization is a digitally driven business with over 96% of total revenue from eCommerce. Second, we offer key item basics as a great value with great service. Third, we have demonstrated the agility and discipline necessary to align our cost structure to the new normal. And lastly, we have a number of strategies in place to further expand our customer base, including the planned launch of Land's End on Kohls.com and in 150 Kohl's retail stores in late September as well as brand collaborations and the introduction of our third-party marketplace. I will speak to these initiatives in just a bit. Looking back, our second quarter total revenue grew 4.6% and our global eCommerce business increased approximately 23% ahead of our…

Thank you, Jerome and good morning. As Jerome mentioned, we're extremely pleased with the performance of our global eCommerce business in the second quarter. As expected, our Outfitter business remains challenging. While there continues to be uncertainty in the marketplace, we'll remain focused on executing our strategies as well as maintaining disciplined expense and inventory management and enhancing our liquidity. While the pandemic continued to impact our business, our strong results reflect its resiliency. Total revenue increased 4.6% to 312.1 million compared to 298.3 million last year. In our U.S. eCommerce business, sales increased approximately 26% while sales in our international eCommerce business increased approximately 9% for the quarter. We saw strength in a number of categories in the second quarter, including swimwear, knits, and loungewear as well as in our home categories. These categories delivered strong double-digit growth in the quarter as we continued to emphasize comfort in our product assortment and marketing strategies with many consumers working from home. Partially offsetting the strong global eCommerce growth, sales in our Outfitter visits were down approximately 43% due to continued pressure as a result of COVID-19. Within our large national accounts, approximately half of our partners operated travel-related industries, including airline, hotel, and car rental businesses. Our small-and mid-sized businesses are reopening, but in many cases with a reduced number of workers. Although we've seen improved trends in recent weeks, sales in our school uniform business was down double digits in the second quarter due to the uncertainty of schools reopening. We expect continued pressure on our Outfitter business, at least through the remainder of the year, which I'll speak to you shortly. Moving to our retail business which I remind you represents less than 4% of our total business. Our U.S. retail sales decrease approximately 51% in the second…

Thanks, Jim. While uncertainty in the environment remains, we believe we are strategically well positioned to manage through the crisis and maintain our strong competitive position within the evolving retail landscape as we continue to operate in this unprecedented period. As I stated earlier, the strategic initiatives we have developed and executed over the past few years, were driving momentum in our eCommerce business, and enabled us to deliver exceptional growth in the second quarter of 2020. Our four core strategies, getting the product right being a digitally driven company, implementing a unit channel distribution strategy and enhancing our infrastructure and processes remain our guiding principles. We're very pleased with response to our product offering as we emphasize comfort across our categories. We attribute the strong customer response to two main factors. One, our key items strategy focus on owning the water, owning the weather, layers, layers, layers and we fit everybody. And two, the work we have done leveraging our data to gain insights in the consumer preferences and to inform assortments. As we look ahead to the fall season, our let's get comfy messaging will remain a major theme as people continue to work from home. Our fall assortment more heavily reflects wear-now items including fleece and layers, sleepwear and home. We will also continue to optimize our assortment of women's knit tops which generate high re-buy rates. We plan to expand this offering with soft fabrications and comfortable silhouettes. Within digital, we continue to expand and analyze our comprehensive database to gain greater insights into our customer preferences. These learnings will guide decisions on both product assortments, marketing programs and messaging in future seasons. Through the leveraging of data analytics and machine learning, we're improving our search engine optimization capabilities and driving customer outreach by identifying where…

[Operator Instructions] Our first question comes from the line of Alex Fuhrman with Craig-Hallum. Your line is now open.

Congratulations on putting up such strong results, certainly with all of the disruption out there in your business, that's quite an accomplishment. I wanted to ask about a couple of things, but to start with you, it sounds like the reorder rates have been really strong over the past couple of months. Can you talk about what's been driving that? And do you think you can sustain that level of retention, as we get into the holiday season and into next year?

Hey, Alex its Jerome. Good to hear from you. I think that what we're seeing is, just a very high demand rate, and one of the things that we enjoy as Lands' End is a customer that is extremely loyal. Our customer has been with us for upwards of 17 years, and they end up coming back and re buying from us. We've seen high re-buy rates. I think it's also partially because it's the right product at the right time. We sell basics, we're more of a basics company or a key item company, and that's what customers are looking for at this point in time. They're looking for comfort. We have the let's get comfy strategy going on right now, and it's really resonating with the customer demand that you see in the marketplace right now.

That's great. Thanks for that. And then, talk a little bit about the Outfitters business, and obviously demand has been weak this year. Can you talk about the health of the business otherwise? Have you continued to see good retention rates with your key customers? Are there perhaps opportunities heading into next year to perhaps win new business given your robust product assortment?

I think you have to look at it, break it down into three parts that we have. You've got school uniforms, which parents have been through the middle of the summer towards the end of the summer, a little bit reluctant to buy because they didn't really know what was going on with the school systems. But what you saw is, as Governor Cuomo said that New York is coming back, so -- and New York is a very large state for us, you could see spikes in the business. And as we've gotten closer to schools opening and parents getting more clarity with what's happening with their school systems, you start to see sequential improvement week on week. And the good thing about that business is, again, it's a basics business, the product doesn't go down. I just think that as the back to school business is going to be more drawn out than what it's been in the past where it's been just a short few weeks. On the national accounts area, that's very travel related. You know, of course we have American and Delta, but we also have Avis Rent a Car and Hilton hotels and Hampton hotels. So, we see that that's going to be continued pressure on that business for some time. And then in the small and midsized business category, retention rates are very good as it is in school uniforms, we have extremely high retention rates there. But that's going to depend, I think, a lot on what happens with small and medium sized businesses, going into the back part of this year and then into 2021. But I would say overall, while we think it's going to be a little bit longer recovery periods for the uniform business, we're pretty well set to take market share as companies want to come back into the full -- through our personalization opportunities.

Thanks, Jerome. And then, lastly, if I could just ask about the Kohl's launch, is that a big driver of the guidance in the third and the fourth quarter and just bigger picture. I mean, how big could something like that be? Do you think it could ultimately be in a lot more stores than that? Just anything you could help us to size that up would be great.

Hi, Alex, it's Jerome. We haven't given a formal guidance on how large Kohl's opportunity will be. But keep in mind, it's just launching now and it's only going to be in 150 stores. So, we're certainly very excited about. The full assortment will be available on Kohls.com. As far as going forward, we'll first get the 150 stores open. I think we'll work out all the kinks and then we'll have conversations with Kohl's, and we will update you with any expansion opportunities.

Thank you. Our next question comes from the line of Steve Marotta with C.L. King. Your line is now open.

Good morning, Jerome and Jim. You talk a little bit about third party, opportunities with other third-party platforms. You mentioned that with a new ERP system that will allow you to with a little bit better ease, essentially drop-ship, but essentially fulfill out of your own e-c. Where can that business go? Are there additional platforms you can get on?

One of the things I've always said, Steve, is that we're really a digitally native company. We started selling online in 1995. And one of the things that this company has really looked to do is to continue to advance the technological investments that we've been making over the last several years. Our ability to ship to other third parties, we're on their website, like a Kohl's or like an Amazon, is something that we're quite proud of. We're able to really service the customer. And the other thing that we're able to do now is bring on other third parties. We think this has a lot of legs. We did one as a test last holiday season. We're going to have about 25 new vendors of this holiday season. And I think as we see, what happens with consumer demand on our platform, we'll determine how big we think that can go, but we think it could be a significant part of growth for us in the future.

That's helpful. Can you talk a little bit about potential product opportunities around the holiday season? If, let's say, dream a little dream, holiday comes in better than what you are currently expecting. Where do you think that growth would be driven from product-wise?

We're concentrating right now on footwear accessories, home furnishings, and seasonal items for this back part of the year.

I understand. And lastly, you mentioned that search engine optimization is helping improve customer acquisition, customer retention. Can you delve a little bit into the current processes that you're utilizing there? And is there anything new technologically that might be coming on in the next 6 to 12 months that would enhance those capabilities as well?

Well, we've been -- first of all, we have a great team of people that we've brought onboard in the last couple of years that have been super helpful in making sure that we're content-rich and that we're employing the right strategies and going out for the right product categories. Secondly, we've been working with outside firms to use machine learning on how we're actually spending our dollars on marketing. And that seems to be working quite well for us. And if you combine that with the increase in demand as of late, what you're seeing is not just new customers coming onboard, but higher rebuy rates from those customers. And what you're also seeing is as we're transitioning into comfortable clothing, particularly knit wear, which we call layers, layers, layers, they have higher rebuy rates than some of our previous product categories that customers have known us for. And again, that brings on more customers and turns them into active customers.

Thank you. Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect everyone. Have a great day.