At Home Group Inc. (NYSE:HOME) Q2 2021 Earnings Conference Call - Final Transcript
Sep 01, 2020 • 04:30 pm ET
At this time, we will be conducting a question-and-answer session. [Operator Instructions] And our first question is from Simeon Gutman with Morgan Stanley. Please proceed with your question.
Hey, guys, this is Michael Kessler on for Simeon. Thanks for taking our questions. First, I wanted to ask about the seasonal inventory in the back half and the ways that, that can, I guess, play out as far as the comp goes. Like is there -- if, let's say, this kind of demand continues into the back-half into Q4 and assuming maybe the seasonal mix is what it might be in the past? I mean, is there a certain level of comp that can be supported? Could this level of comp be supported or I guess yeah, if you think about frame, the impact of the seasonal inventory potential on the back-half would be great.
Peter S. G. Corsa
Well, when we think about the inventory constraints in the back-half, what we said is, we didn't see much impact in the month of August as we move through, because we have the inventory on hand, but we do expect that to be constrained and moderate as we move through the balance of the quarter. We would also say that when we look at patio and garden in the first-half, it wasn't a constraint, because we had already bought that. So it is a difference in the second-half versus the back-half, and we've seen these really strong results since the stores have reopened. And as we move forward, we will be constrained, because when we made those decisions, both in Halloween and harvest, even those results are very strong right now and certainly into Christmas as we move into Q4. But what we would anticipate over the balance of the back-half if that demand stays there is that we would experience really nice sell-throughs and we would see nice upside in gross margin relative to last year.
Yes, exactly. And just a follow-up on the competitive landscape. We've been hearing about liquidation of some of your competitors. Pier 1 has been one that we've heard maybe starting to slowdown on their liquidation sales. I'm curious do you think that can take some of the pressure off of your business in the back-half? And could it actually have meant that your underlying comp run rate was actually somewhat muted by those sales and that there could be even more upside had they not been occurring?
Lewis L. Bird III
Michael, this is Lee. I would say, the landscape continues to be evolving. There's weaker, the marginal players that are finding difficult to survive. Obviously, you mentioned Pier 1 and some other retailers will be closing and have been closing about 1,000 stores over this summer and early fall. And other specialty retailers, obviously, have been filing for bankruptcy. But I would say, there is a short-term implication that could be challenging because of those liquidations. So I would tell you with these kind of comps, we haven't felt that. But there has