Good day, ladies and gentlemen. And welcome to the Lands' End Second Quarter 2019 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct the question-and-answer session and instructions will be given at that time. [Operator Instructions]. As a reminder, this conference maybe recorded. I would now like to introduce your host for today's Mr. Bernie McCracken, Chief Accounting Officer. Sir, you may begin.

Good morning. And thank you for joining the Lands' End earnings call for a discussion of our second quarter fiscal 2019 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 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 reports 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 obligation 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 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 us for a review of our second quarter financial and business results. We were pleased to have delivered sales and net income above our expectations and adjusted EBITDA at the high-end of our range, illustrating the strong progress we're making across our strategic initiatives. Based on our results and confidence in the second half, we are reiterating our revenue and increasing our EPS guidance for fiscal 2019. Our sales increased 5.5% when adjusted for Sears closures and the lapping of the Delta launch. This growth was led by the ongoing momentum in our global e-commerce business, which grew over 7%. In addition, our U.S. Company operated retail stores once again delivered strong comparable sales growth at 7.5%. As we've discussed in the past, our growth strategies are centered on getting the product right, operating as a digitally led company, executing a unique channel strategy, and improving business processes and infrastructure. The progress we're making across to our numerous strategic initiatives continues to put us on track to achieve our stated long-term objectives of $1.8 billion to $2 billion in revenue and high single-digit EBITDA margin for fiscal 2022. Our mission is to deepen our engagement with our core customers and attract new customers to Land's End by delivering product with a purpose that offers great value to our customer. We believe our growth will be driven by the continued optimization of our product assortment as we hone our key item strategy in our destination categories of swim, outerwear, knit and bottom. We are driving this product strategy through four main objectives that we articulate as, own the water, own the weather, layers, layers, layers and we fit everybody. Our data science department continues to improve our ability to leverage product…

Thank you, Jerome and good morning. As Jerome mentioned, we're pleased to have delivered sales and net income above our expectations and adjusted EBITDA at the high-end of our range, despite gross margin pressure. For the second quarter, total company revenue decreased 3.1% to $298.3 million compared to $307.9 million in the same period last year. The decline was due to operating 110 fewer Lands' End shops at Sears and counting the impact of Delta Airlines launch from last year. After adjusting for both, our revenue increased 5.5%. We saw continued strength in our global e-commerce business, which increased 7.3%, as well as significant growth in our company operated stores. We saw solid performance across most of our categories, particularly with strength in knits and bottoms, as we continue to focus on delivering relevant, high quality product at a great value to our customers. Aligning with revenue, total buyers increase mid single-digits with new customers up in the high teens. Online traffic and conversion increased in the second quarter, but in the highly promotional environment, average order value did decline slightly. In our retail business, as expected, with a significant number of Sears store closures, sales decreased from $31.3 million to $14.2 million. We ended the quarter with 37 shops at Sears, all of which have leases expiring by the end of this year. We continue to see strong performance in our company operated stores with a 7.5% comp store sales increase for the quarter. We also opened an additional two new stores and ended the quarter with 21 U.S. company operated stores. We remain very pleased with the performance of our new stores and plan to open an additional four stores this year. Within outfitters, our sales declined $7.4 million as the Delta business was down due to comping…

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

Hey, guys. Thanks for taking my question and congratulations on a nice quarter here. I wanted to ask about the guidance. Just looking at the results of this year, EBITDA was down good amount here in Q1. It was down slightly in Q2. Looks like based on the guidance, it should be up a little bit here in Q3 and then the implication here in the full year guidance is that Q4 EBITDA should be up quite a bit more than that. So, just kind of trying to understand, is that just the natural continuation of the better trends you've seen and the increases in the buyer file throughout the year? And just trying to dissect how much of that, is just that natural improvement that you've been seeing versus what you're expecting to see from the American Airlines launch coming here in the fourth quarter?

Thanks, Alex. Yeah, I think it's a combination of both of those things. I think you have to remember we have the improving trends. We expect to see those continue into the back half. And then in the first half, we're comping the Delta Airlines launch. And then as you mentioned in the fourth quarter, we'll pick up the impact from the American Airlines launch. So, the combination of all those things I think support our guidance.

Okay. And then just thinking about the swim business, I mean, it sounds like that got off to a little bit of a slower start than you'd expected and then rebounded nicely throughout the season. Anything in particular that was driving that slow start? And curious, what were you able to do to course correct there and get that business back on track?

Hi. How you are doing, Alex? Yeah, swim was sort of a little bit slow in the quarter. Quarter 1 was not terrible. May was really not a great month, partially due to what we had one print that didn't resonate very well with consumers. But then back into June and then July, we saw swim pick up and it continued to pick up into August. So, it was really just a slow start to the quarter, not too much of any changes that we were able to make, because we were bought already, but just consumer demand picked up as summer went on.

Okay. That's helpful. And then just thinking about, your other big seasonal categories coming up here in the back half. Outerwear has always been a big category for you. Do you feel you have the right inventory levels for that? And is it, you know, perhaps the expectation that consumers might be purchasing a little bit closer to their actual needs therefore for outerwear as well?

Yeah. If you think back to last year, our key item strategy worked extremely well. We did much better in Q3, Q4 in 2018 than 2017. And I'm really chalked that up to a lot of the key items that we had. Flannel shirts, cashmere sweaters, outerwear. And as we go into the back part of 2019, our strategy is really the same. It's our key items that the customers come and look for. So, we think for -- we're bought really well for the holiday season. We've put plans in place, which resonate what we've learned in the last year. And we feel pretty good about it so far.

Well, that's great. Thank you very much. And look forward to seeing your holiday assortments.

Thanks, Alex.

Thanks, Alex. Will talk to you.

Thank you. [Operator Instructions] This does conclude today's question-and-answer session. Ladies and gentlemen, thank you for participating in today's conference. And you may all disconnect. Everyone have a wonderful day.