Good day, ladies and gentlemen and welcome to the Lands’ End’s Second Quarter 2018 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later we will conduct a question-and-answer session and instructions will be given at that time. [Operator Instructions]. As a reminder, this conference call maybe recorded. I would now like to turn the conference over to Bernie McCracken. You may begin.

Good morning and thank you for joining the Lands’ End earnings call for our second quarter fiscal 2018 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 with our covering analysts. Please also note that the information we are 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 and quarterly report on Form 10-Q. 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 obligations to update forward-looking statements made by us. Subsequent events and developments may cause the company’s outlook to change. During this call, we will 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 on 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 and thank you everyone for joining us today. We're very pleased with the progress we have made across our strategic initiatives during the second quarter. The work we have done is evidenced by our performance. We delivered our fifth straight quarter of top line growth with sales in the second quarter growing by approximately 2%. We saw strong start to the quarter in May. However, as Jim will discuss shortly sales in July slowed as we did not have adequate seasonal inventory to meet demand. We're also pleased to see stabilization in our gross margin rate with both the U.S. direct and retail businesses as a result of strong sell through, and we recorded our fourth straight quarter of profitability growth with adjusted EBITDA increasing 13%. Our products with purpose continue to resonate with our customers as we emphasize newness while maintaining our focus in quality, value, and comfort. As we've stated before, over the last several quarters, all of our efforts to improve and grow have been grounded in data analytics. As it relates to our product assortment, by leveraging this data, we're able to align our offering with what our customers want. The progress we are making is illustrated by continued strength in our conversion rates which were up in the high-single digits in the second quarter. We saw our strongest sell through in beach-living tankinis, chino shorts, cover ups, and knit sleeveless dresses. Our early reads on our fall product have been strong due in part to the positive response to the newness we've injected into our assortment. In particular, we're very pleased with the early results on our denim launch. We believe that we have an opportunity to win this category with our expertise in fit combined with our ability to strike the…

Good morning everyone. Overall we're pleased to see the growth in our direct business in addition to the stabilization of our gross margin as we execute against our strategic initiatives. For the second quarter revenue increased 1.9% to 307.9 million compared to 302.2 million in the same period last year. Sales in our direct segment grew 6.4% to 276.6 million while retail sales decreased 25.8% to 31.3 million. As Jerome stated consumers continue to respond well to key items within our core categories. However, our efforts to tightly manage inventory left us short on critical end of season merchandise. Specifically items in beach living, chino shorts, mid cover ups, and kids swimwear. We put substantial effort behind inventory discipline and even though we made tremendous progress in this area we believe we overcorrected in terms of our [indiscernible] merchandize which left us short on end season sale product in the latter part of the quarter. While our decision to reduce meltdowns did have a positive impact on merchandized margins, it had a negative impact on overall sales and specifically did not allow us to capture additional profitable meltdowns sales at the end of the season. That said the quality of our inventory continues to improve with another significant reduction in aged inventories which then -- instilling a test and learn culture across all facets of the organization and rather than just buy more. We will apply what we learn in order to buy smarter. As a result we have already adjusted inventory buys for the second half to ensure we had the right level of end season markdowns and we will be well positioned in terms of our product mix and quantity for fall and holiday. Within the direct segment we continue to see strong growth in our Lands’ End…

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

Great, thank you for taking my question. Appreciate the commentary about the seasonal product and your inventory levels there. I'm curious what you're planning for the fall and holiday season in terms of inventory levels for outerwear and your seasonal categories there, are you expecting to see similarly strong demand in the seasonal categories for the winter items this year?

Good morning Alex. Well, I think as I said I think we're taking learnings out of this last quarter. We think we bought too tight. It definitely had a positive impact on our cash flow and a positive impact on our lower inventory balance, but we went a little bit too far, so we certainly are making those adjustments and are going to buy a little bit deeper for fall and holiday.

That's helpful, thanks. And then can you talk a little bit about the stores that you've been opening. You know is it effectively the same merchandise assortment as you are seeing on landsend.com, is there anything that customers, in particular, have been gravitating towards and do you get a sense that there's a different mix perhaps of new versus existing customers in those stores versus your online business?

It's still early days Alex, but what we have seen so far is that best sellers online are best sellers in stores. Things that are key items online that do extremely well there also do well in stores. We do see, because the stores are a tighter footprint, and we don't carry everything in our full range in our stores that we have a little bit higher penetration with our kiosk sales. So customers will come in and they may want something that's not in the store or maybe we don't have the size, and they buy it online, and that penetration has been increasing a lot more with newer stores than with some of the existing stores that we've had.

That's helpful, thank you very much.

Thank you and I'm showing no further questions at this time.

Okay, then thank you very much.