Categories Consumer, Earnings Call Transcripts

Express, Inc (EXPR) Q1 2023 Earnings Call Transcript

EXPR Earnings Call - Final Transcript

Express, Inc (NYSE: EXPR) Q1 2023 Earnings Call dated May. 24, 2023

Corporate Participants:

Greg JohnsonVice President, Investor Relations

Tim BaxterChief Executive Officer

Jason JuddSenior Vice President and Chief Financial Officer

Analysts:

Marni ShapiroRetail Tracker — Analyst

Eric BederSCC Research — Analyst

Dana TelseyTelsey — Analyst

Presentation:

Operator

Good morning, my name is Rob, and I’ll be your conference operator today. I would like to welcome everyone to the Express Inc Conference Call to discuss our First Quarter 2023 Earnings. [Operator Instructions]. Thank you.

I would now like to hand the call over to Greg Johnson, Vice President of Investor Relations. Please go ahead.

Greg JohnsonVice President, Investor Relations

Thank you, Rob. Good morning, and welcome to the EXPR Earnings Conference Call and Webcast to discuss the announcement of our first quarter 2023 results and the completion of the joint acquisition of Bonobos in partnership with WHP Global. Our first quarter 2023 earnings release and presentation can be found in our Investor Relations website. These items will be archived and our call will be available for replay.

I’d like to open by reminding you of the company’s Safe Harbor provisions. Today’s call may contain forward-looking statements. 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. For a description of the risk that could cause our results to differ materially from those described in forward-looking statements, please refer to our 2022 Form 10-K and other filings with the SEC, which are posted on our Investor Relations website. These risks and uncertainties are further detailed in our earnings press release that was issued this morning.

These statements represent our current judgment and are subject to risks, assumptions, and uncertainties. Express assumes no obligation to update any forward-looking statements whether as a result of new information, future events, or otherwise, except as required by law.

In addition, we may refer to certain non-GAAP measures. You can locate a reconciliation of any non-GAAP measures discussed in our comments to amounts reported under GAAP in our earnings release and in the corresponding presentation. We will also be providing financial comparisons to prior fiscal periods and our prepared remarks today refer to comparisons to the corresponding period in 2022 unless otherwise noted. Please see the explanatory note in the earnings release for additional details regarding the definition of certain items. With me today are Tim Baxter, Chief Executive Officer; and Jason Judd, Chief Financial Officer.

I will now turn the call over to Tim.

Tim BaxterChief Executive Officer

Thank you, Greg, and good morning. Earlier this year, we entered into a transformative partnership with WHP Global that strategically and financially repositions our company. We have begun a bold new chapter as EXPR, that will be guided by a new corporate strategy. We will transform our company to create shareholder value by first achieving profitable growth in our core express business. Second, optimizing our omnichannel platform and third, accelerating our growth and profitability through the WHP Global partnership.

As we advance this new corporate strategy, we will build upon a foundation of strong rigorous financial discipline and completely redesign the financial architecture of our company to create a more agile expense framework that will allow us to be more flexible in a dynamic macroeconomic environment.

Earlier this year, we began a company wide initiative to aggressively reduce expenses. In January, we disclosed $40 million in annualized expense reductions versus 2022 prior to the impact of inflation. And since that time, we have implemented an additional $25 million for a total of $65 million that will be realized in 2023.

These expense savings are just the first step. We have engaged external advisors to assist us in analyzing, identifying and implementing further expense reductions and potential margin expansion opportunities. Having already implemented $65 million before the external advisors began their assessment, we are confident that we will realize significant additional expense reductions in the back-half of 2023 and the full year 2024. These aggressive cost savings are just one aspect of how our new corporate strategy that will allow us to deliver on our first priority, which is to achieve profitable growth in our core express business.

Despite meaningful progress against each of the four foundational pillars of the Expressway Forward strategy product, brand, customer and execution, we have not yet delivered on our goal. Q1 comparable sales for the Express brand were negative 14%. Our results on the top and bottom line were not where they needed to be. Reduced consumer spending, increased price sensitivity in discretionary categories and heightened promotional activity across the industry that began in 2022 continued into the first quarter of this year and negatively impacted our performance.

The need to promote more to keep pace with consumer expectations and the competitive landscape led to greater margin erosion than we anticipated. We’ve already taken action across each of the four pillars to change the trajectory of our business and expect improvement in comparable sales trends and market share gains as we move through the year.

Starting with product. As we began the first quarter, our women’s assortments were out of balance across multiple dimensions. We continued to take corrective actions to address these imbalances and saw sequential improvement in sales as the quarter progressed. These assortment recalibrations will continue as we move through the year. While our women’s business improved in Q1 versus Q4, it was offset by a deceleration in our men’s and outlet businesses which delivered record volume in Q1 of 2022.

Moving forward, we are doubling down on key category strength, which we expect will lead to increased frequency units per transaction, loyalty and market share gains. We are effectively chasing into trends and secured additional product for Q2 in some of our best selling items and categories. We are driving reductions in our average unit cost and expect to realize those benefits in the second-half of the year.

Turning to brand. Express has been a part of the fashion landscape for over 40 years and changing consumer perception of the brand is the component of a transformation that takes the most time. We are transforming from being known as a store in the mall to a brand with a purpose, powered by a styling community. That brand purpose, we create confidence, we inspire self-expression has played an important role in building our Express styling community which includes customers, sales associates, Style Editors, content creators, influencers and brand partners. We grew our Express Style Editors to over 2,500 in Q1, a 70% increase over the number we had in Q4 of last year.

The content they created and the content we create that features them is some of our best performing organic social content. We will continue to build, activate and amplify our styling community in 2023, if this is a key strategic differentiator for Express.

Turning to customer, spends per customer held steady in the quarter due to an increase in frequency. We fell short of our acquisition targets, but did see sequential improvement as we moved through the quarter. We have specific strategies in place to engage existing, reengage lapsed and attract new customers.

Our fourth pillar is execution. E-commerce outpaced retail and outlet stores. E-commerce sales were driven by the improvement in our women’s business, which accounts for a significant share of our online sales. We had edited our assortments too much, so we corrected for that and are seeing the benefit.

Sales performance in our retail and outlet stores was negatively impacted by the slowdown in our men’s business, a significant decline in traffic and reduced conversion. We expect that all of the actions we have taken will drive improvement in the top and bottom line as we move through the year and that is reflected in our outlook.

The second component of our new corporate strategy to transform EXPR to create shareholder value is to optimize our fully-integrated omnichannel operating platform in order to operate and grow a portfolio of fashion brands. We will leverage our existing strengths and capabilities in production and sourcing, logistics, technology, real estate, finance, legal and HR to achieve synergies and drive efficiencies across this portfolio. Let me share a few examples. In production and sourcing, we will apply our increased scale to realize unit cost savings and evolve our sourcing strategy to rebalance our ratio of agent to direct.

In logistics, we will consolidate and strengthen our relationships with certain 3PL service providers and implement advanced order management functionality to reduce the cost of fulfillment. In technology, we will integrate systems within and across our brands to expedite speed-to-market and enhance data consistency. We will enable automated and self-service data exchange with our trading partners and we will have a more modern order management system with sophisticated routing algorithms.

UpWest is already a part of our EXPR brand portfolio and a proof point of the effectiveness of our platform today. We launched UpWest in 2019 as a digitally native brand and have since opened 13 stores and established a wholesale relationship with Nordstrom. UpWest is included in the summer edition of the GQ subscription box, which is distributed quarterly to 25,000 subscribers. UpWest had a terrific quarter with sales up 29%, more than doubling in the last two years.

The third component of our new corporate strategy to transform EXPR to create shareholder value is to accelerate our growth and profitability through our partnership with WHP Global. The WHP Global team is actively exploring domestic category and international licensing opportunities for Express. And today, we announced that we have completed the joint acquisition of Bonobos. Bonobos launched in 2007 as a digitally native menswear brand and quickly became known for exceptional fit and an innovative guide shop retail model. Bonobos has delivered strong sales growth over the past three years and the business generated sales of approximately $200 million in 2022.

We intend to build upon the strength of Bonobos and E-commerce, marketing and customer loyalty. Leverage our expertise in product and omnichannel retail and unlock additional growth for Bonobos by extending the brand into underpenetrated categories. We also plan to drive scale through WHP Global’s expertise in licensing and international distribution. Bonobos is a very compelling addition to our brand portfolio and we expect it will be accretive to operating income and free cash flow positive in fiscal 2023.

Now let me turn the call over to Jason, who will take you through the financial details of the Bonobos acquisition provide more detail on our first quarter results and share our outlook for 2023.

Jason JuddSenior Vice President and Chief Financial Officer

Thank you, Tim, and good morning. Let me begin with the Bonobos acquisition that we and our strategic partner WHP Global [Technical Issues] today. As Tim said, this is an important step-in our company’s transformation and a very compelling addition to the EXPR brand portfolio.

EXPR and WHP Global jointly acquired Bonobos from Walmart for a combined purchase price of $75 million. WHP Global acquired the brand for a purchase price of $50 million and we acquired the operating asset and assumed related liabilities of the business for a purchase price of $25 million.

Concurrent with the closing of the transaction, we and WHP Global entered into an exclusive long-term license agreement with multiple renewal options granting EXPR the right to use the intellectual property acquired by WHP Global for the operation of the Bonobos business in the United States in exchange for payment of a royalty fee. As Tim shared, we have embarked on a company-wide initiative to reduce expenses, drive efficiencies and return EXPR to long-term profitable growth. Our external advisors are assisting us in a comprehensive top-to-bottom review of the business and I’m leading this initiative. These actions are part of our new corporate strategy and they are just the first of many steps and what will be an ongoing plan to drive substantial, sustainable change in our operating model in order to generate improved profitability.

Moving to our Q1 results. We expected comparable sales of negative low-double-digits, we posted a negative 14 comp. We expect the gross margin to decrease approximately 850 basis points. We saw a decrease of 1,260 basis points. We expected and actualized at approximately 500 basis points of deleverage in SG&A expenses as a percent of sale. We expected an adjusted diluted loss per share of $0.70 to $0.80 and actualized at a loss of $0.99 per share.

Moving to the balance sheet. We expected our inventory to decline sequentially and move closer to parity with quarterly sales changes. Our inventory was down 7%, which was a meaningful improvement from the 2% increase in Q4. Our balance sheet at quarter-end, includes the $52 million CARES Act receivable we mentioned before and which we expect to receive in the back-half of this year. Borrowings against our asset-based lending facility at quarter-end for $180 million and we had $34 million of cash-and-cash equivalents on-hand and $90 million available on the revolver.

Turning to our outlook for 2023. Please note that forecasted financial results for Bonobos are included in the outlook. We considered our first quarter performance, the work we have done to rebalance our assortment. The momentum we are seeing, we are beginning to see in our E-commerce business. The impact of the $65 million in expense reductions that we have already implemented and the expected performance of Bonobos. This outlook does not yet reflect the expense reduction work we are doing with our external advisors. We have balanced those factors against the softness in our trend and the ongoing challenges of the macroeconomic and retail apparel environment.

For our outlook for Q2 compared to the second quarter of 2022 is as follows; Net sales of approximately $425 million to $450 million, including approximately $30 million of Bonobos sales. Gross margin rate decreased approximately 800 basis points an aggregate, which includes approximately 300 basis points of contraction from the impact of the WHP Global transaction and approximately 200 basis point benefit from Bonobos. SG&A expenses as a percent of sales to a leverage approximately 300 basis points, including an approximately 100 basis point impact from Bonobos. Diluted loss per share of $0.50 to $0.60, consolidated inventory to grow by 10% to 15% with the addition of Bonobos.

Our outlook for the full year is as follows; Net sales of approximately $1.9 billion to $2 billion, including approximately $125 million to a $150 million in Bonobos sales. Diluted loss per share of $1.50 to $1.70. Capital expenditures of approximately $30 million. We have reduced our capital expenditures by $25 million versus our previous outlook of $55 million. This reflects the redeployment of capital to fund the Bonobos transaction, and respond appropriately to our business trends.

As Tim discussed, we are transforming EXPR to create shareholder value with a new corporate strategy. Added investor events to be held later this quarter. We will share more information about how this new strategy will be implemented more about the scope and timing of our expense reduction realization as well as more detail on how we will streamline the efficiency of our organization and improve the agility of our operating model.

And now let me turn the call back to Tim.

Tim BaxterChief Executive Officer

Thank you, Jason. If I leave you all with one message today, it is that we are a different company than we were just three months ago, and we will be guided by a new corporate strategy. We will transform EXPR to create shareholder value by first achieving profitable growth in our Express business. Second, optimizing our omnichannel platform and third, accelerating our company’s growth and profitability through our partnership with WHP Global.

Thank you. And I will now turn the call over to the operator and we will take your questions.

Questions and Answers:

Operator

[Operator Instructions]. And your first question comes from the line of Marni Shapiro from Retail Tracker. Your line is open.

Marni ShapiroRetail Tracker — Analyst

Hey, guys. Congratulations on Bonobos.

Tim BaxterChief Executive Officer

Thanks, Marni.

Marni ShapiroRetail Tracker — Analyst

Can we dig in a little bit? I’d like to talk about Bonobos, we can maybe do it offline. But I just wanted to dig in a little bit at Express because you said that the women’s business did start to improve a little bit. Could — was she coming into the store and not buying or buying only what is on-sale, did men just not shop this quarter, just if we could dig in a little bit to what’s going on there?

Tim BaxterChief Executive Officer

Yeah, I would say that. Yeah. As I said, we did see improvement in our women’s business as we move through the quarter as the recalibration that we began to make in the latter part of last year — back-half of last year began to take hold. That improvement was primarily driven in E-commerce. We have seen traffic declines in-stores and those traffic declines as you know, Marni, the men’s business is distorted to two stores and so that traffic decline in stores, coupled with lower conversion as the consumer was certainly looking for a deal is what is — was the offset. So while we did see that improvement in women’s and actually the improvement that we saw in women’s tracked with about what we anticipated, the deceleration in both men’s and outlet was driven by traffic declines and lower conversion as the consumer really push back against higher prices.

When you look back to the five quarters where we drove growth, I mentioned this in the call in the fourth quarter, we drove that growth through increases in our average unit retails. And those increases in our average unit retails or what the customer began really pushing back on in the back-half of the year. So a part of the recalibration that we have worked on in women’s and are working on in both men’s and outlets is bringing those average unit retails down by distorting back into some of our opening price point categories.

Marni ShapiroRetail Tracker — Analyst

Great. And can I just, I spend — I spend a lot of time in your stores, a lot of time on your website, and your presentation coming into the stores is always very powerful. When I spend time on your website, it’s very easy to find, for example, you have a really nice editor shirt. I think, it’s the editor, the Portofino shirt in linen.

Tim BaxterChief Executive Officer

Portofino.

Marni ShapiroRetail Tracker — Analyst

You have. Yeah, you have a really nice trouser online. I’m trying to look for it right now so I can remember the name of it. But you have a really nice trouser online, you have a beautiful editor Bootcut type of pant you have, the right puffed sleeves online. It feels very easy to outfit a wardrobe online and sometimes in the stores, I don’t feel that same connection. Is the team looking at how to — I guess make simplify the shopping experience in stores. So it

Tim BaxterChief Executive Officer

Yeah.

Marni ShapiroRetail Tracker — Analyst

Really can’t replicate but at least comes closer to what we’re seeing online?

Tim BaxterChief Executive Officer

Yes, absolutely, Marni. And I would say that it is true in women’s. Well, I agree with what you’re saying in women’s. I would say our men’s store experience has been more aligned with the online experience and ease of shopping. In women’s, we are absolutely rethinking the way we have the store merchandised for ease of shopping for the consumer, particularly as we distort back into many of our icons. So, we are seeing great success by innovating our icons.

So you mentioned the Portofino shirt. We just launched a linen Portofino shirt. We launched a boyfriend Portofino shirt. We actually launched a Portofino shirt dress. And those things have been highly successful. To your point, they are easier to find online, because you can search Portofino. And our customer as you know are — knows that — know that franchise. We’re also getting back in greater depth in things like our Gramercy top, our bra-cami, we just reintroduced in its OG form.

Marni ShapiroRetail Tracker — Analyst

Wow.

Tim BaxterChief Executive Officer

So yes, we’re also thinking about how to remerchandise the stores to make it simpler to shop without going back to huge commodity type presentations and piles of items. Exactly.

Marni ShapiroRetail Tracker — Analyst

Yeah. Okay. And then just could we a kind of follow-up just on the men’s side as well. I know your stores are distorted to men’s and the traffic was down. Is the guy buying online, when he is there, is he buying in stores, when he is buying or is it also just men are not buying as much amendment tend to not follow fashion as quickly?

Tim BaxterChief Executive Officer

Yeah. I think that the overall demand certainly has come down from where it was in the first quarter of last year. We delivered a record performance in men’s in 2022. And so we’re up against really aggressive comp increases in our men’s business and I think the overall demand for men’s has come down, driven by, and certainly what we saw in the first quarter was significantly lower demand across the board, but driven by some key categories for us, which are suits and dress shirts and while those categories performed at about the same level as total men’s, those are categories that drive him into our stores. So — and when he is in-stores then he buys across multiple classifications. So we did see demand in total come down driven by a decrease in traffic in the stores.

Marni ShapiroRetail Tracker — Analyst

Okay. That makes a lot sense. I’ll take the rest offline as I wanted to dig in little to Bonobos, but I’ll do it offline with you guys. I’ll talk to you later.

Tim BaxterChief Executive Officer

Great. All right. Thanks, Marni.

Operator

And your next question comes from the line of Eric Beder from SCC Research. Your line is open.

Eric BederSCC Research — Analyst

Good morning.

Tim BaxterChief Executive Officer

Good morning, Eric.

Marni ShapiroRetail Tracker — Analyst

Good morning. Could you talk a little bit about the inventory. Now that Bonobos is going to be added there is not going to be as much apples-to-apples, but what was the inventory opportunity and we’ve been carrying continuing that shipping costs and freight costs are coming down materially. How much of that is an opportunity in the back-half and going-forward to drive higher margins?

Jason JuddSenior Vice President and Chief Financial Officer

Yeah. Eric, good morning. It’s Jason. I think, I’ll answer those in reverse order. I think as we look at the supply chain in overall logistics network, we are seeing opportunity. We’re seeing opportunity in costing. We’re also seeing opportunity in timing, finding the network to be faster than it was this time last year and having more agility to be able to plan and destore to more cost effective shipping routes. And so there is an opportunity in the back-half of this year. It will assist in the overall costing initiatives that we’ve been talking to and the AUC that we build into our — Into our product, which you and I have discussed in the past. I would say that, that will be more impactful in the third quarter and fourth, obviously, than it is right now, just given lead times.

When it comes to overall inventory that outlook view of overall inventory up 10% to 15% with the inclusion of Bonobos underlying everything, but I’d say it’s the Express inventory, we continued to see moving in parity with our sales. We’ve made good progress on that. We do, as you know, towards the end of Q2, it starts and then definitely in Q3, start the ramp-up for what is an important holiday build. And so that normal cyclicality will occur. But otherwise, it will be along the same path that we’ve been speaking to.

Eric BederSCC Research — Analyst

Great. And a product question, I know you’ve been rolling out swimwear women’s this year and men’s last year. How is that been doing as a category? And are there categories like that, that really you haven’t been involved in, where you seeing opportunities going-forward? Thank you.

Tim BaxterChief Executive Officer

Yeah. Thanks, Eric. actually, the swim, our consumer has been responding very very well to swim. In men’s, as you mentioned, last year we launched it last year, it was very good and we’ve delivered more of that product and distorted more into that product this year and it has performed very well. In men’s, particularly the sets have been doing well, where we have swim trunks with matching shirts, matching t-shirts, that has been performing very, very well for us.

In women’s, this is our relaunch of swim, we have carried swim in the past and it’s something that our consumers have consistently asked us for, and the response has been very positive also in women’s. So, it is a category that we believe, it can be a powerful category for us as we move forward. We’re in learning mode this year particularly in women’s, and we’ll obviously take what we learn and move that forward as we think about the coming year.

The second part of your question, yes, there are categories that we believe we have permission to play in that our customers are buying from other people. And we will continue to explore opportunities to introduce those categories into the mix, especially online. And so, without mentioning what those things are, yes, those things are to come.

Eric BederSCC Research — Analyst

And could you maybe just what do you plan to do in terms of new stores for Express Edit and for UpWest?

Jason JuddSenior Vice President and Chief Financial Officer

Yeah.

Eric BederSCC Research — Analyst

West stores. Thank you.

Tim BaxterChief Executive Officer

Yeah, so Express Edit continues — we continue to learn from our stores. The Express Edit stores and we continue to believe that it is a very powerful opportunity for us to diversify our portfolio outside of our store portfolio outside of the mall. As you know, we opened six new locations in the back-half of last year. And we’re learning a lot from those locations there and powerful, powerful locations Manhattan, Boston, Miami. Philadelphia.

We just opened last week an Express Edit on Greenwich Avenue in Greenwich, Connecticut. That is off to — also off to a very strong start. At this time, that is the only Edit store, we have planned to open this year. As I said, we are learning from these stores, we’re continuing to get a very large penetration of new customers coming to the brand through these stores. We’re also seeing digital sales, E-commerce sales and the surrounding zip codes increased fairly significantly as we open these stores, and consumer feedback has been wildly positive about the experience that they have in these stores. So we have 11 stores now, we’re going to stick with 11, as we move through the year and continue to learn and will come back with a more robust strategy around Express Edit when we’re confident about exactly how we want to proceed with that strategy.

UpWest continues to do very, very well, primarily driven by its digital business and a strong wholesale partnership with Nordstrom. Same thing is true in UpWest stores. We’re seeing large numbers of new customers come to us through UpWest stores. And digital sales and surrounding zip codes increasing around the UpWest stores. That being said, there are a few UpWest stores that we will close this year and a few that were short-term leases, our intent was to use these as marketing vehicles to do exactly what I described, bring new customers into the brand, increase sales in the surrounding zip codes. And there are a few that we will be opening this year as well.

Eric BederSCC Research — Analyst

Okay, guys. Congrats and good luck for the rest of the year.

Tim BaxterChief Executive Officer

Thanks, Eric.

Operator

[Operator Instructions]. And your next question comes from the line of Dana Telsey from Telsey. Your line is open.

Dana TelseyTelsey — Analyst

Good morning, everyone. Let’s talk about the Bonobos a little bit. Certainly, I see the guidance range that you gave around $125 million to a $150 million in sales and it will add around 10% to 15% to inventory. When you think about, I think was the former numbers that they did for ’22 around $200 million in sales at a 35% gross margin. Overall, how do you see the business given you’re taking it over three months into the fiscal year, compared to 2022 and the puts and takes of margins there relative to your core business? Thank you.

Jason JuddSenior Vice President and Chief Financial Officer

Thank you, Dana. I’m going to start again at the end of your question and move to the beginning. As we talk around Q2, we did talk about the margin impact from Bonobos being accretive to the overall EXPR performance. We do continue to see as we did when we announced that Bonobos will be cash flow accretive and operating margin accretive to the business in this year.

Of course, this year, to your point, really is stub period from June to January, but we do continue to see it productive for us in this year. When it comes to their sales performance, they have a very good trajectory continuing on the trajectory that we disclosed in our announcement presentation where they have seen multiple years, three years in a row of double-digit growth. We continue to see that on the horizon.

As you would expect, as we just are incorporating them into our overall performance. We are managing it from a conservative perspective with the overall macro-environment. But we’ll have a lot more details to share as we turn the corner and get into our investor event that we’ve sort of signaled in our structured remarks and as we get to this end quarter’s next earnings event.

Tim BaxterChief Executive Officer

It’s an exciting addition to the portfolio, Dana. And I would say now obviously, we are very focused on the core Express business and taking all the action we need to get the core Express business back to growth. But we have two brands in the portfolio now that are driving substantial growth, UpWest and Bonobos. So like I said, we’re a very different company today, having closed on Bonobos overnight.

Dana TelseyTelsey — Analyst

Yeah. And then just the cadence of the first quarter. What did you see in terms of the cadence in the first quarter. And is there any timing initiatives or things we should be mindful of as you get into the second-half of the year with the seasonality of goods coming in and how you are planning inventory?

Tim BaxterChief Executive Officer

Yeah. I would say, we saw a fairly consistent performance through the first quarter, Dana. It’s important, we didn’t comment in the prepared remarks, but we were up against a 31% comp increase last year in the first quarter. So our two year stack is still quite positive on the first quarter. Last year, we had a real inflection point at Memorial Day. So actually this week last year we had a real inflection point, where we saw the deceleration of the business, we talked about that last year in our second quarter earnings call, where we still had a strong May, June and July was when we really saw an inflection point and began to decelerate. So that is included in our forecast. That is included in the comp improvement that we expect to see as we move through the balance of the year. So it’s Memorial Day. It’s this week where we really saw that inflection point.

Dana TelseyTelsey — Analyst

Got it. And on the path of the women’s and balance in the assortment. Are you on the timing path that you want to, Tim, in terms of the corrections there?

Tim BaxterChief Executive Officer

Yeah. Well, of course, I’d like it to be faster. But yes, we are on track. We attacked certain categories that we knew where the most important for us to get right. And we have seen strong response in those categories. One of them being women’s tops, where we have seen a very, very dramatic improvement of our performance. As we receive goods and recalibrate the assortments in the second quarter and moving into the third quarter, I expect that we’ll get much more — the architecture of the women’s assortment will be much more in-line with where we would like it to be. So, I’d expect to see the full results of that as we — again as we move into the back-half of the year.

Dana TelseyTelsey — Analyst

Thank you.

Tim BaxterChief Executive Officer

Thanks, Dana.

Operator

And there are no further questions at this time. Mr. Baxter, I will turn the call-back over to you for your closing remarks.

Tim BaxterChief Executive Officer

Thank you all for joining us this morning. Have a good holiday weekend.

Operator

[Operator Closing Remarks].

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