Tilly's (TLYS) Q2 2020 Earnings Call Transcript

Tilly's (TLYS 1.17%)
Q2 2020 Earnings Call
Sep 03, 2020, 4:30 p.m. ET

Contents:

• Prepared Remarks
• Questions and Answers
• Call Participants

Prepared Remarks:

Operator

Greetings. Welcome to Tilly's Inc. second-quarter 2020 earnings results conference call. [Operator instructions] Please note this conference is being recorded.

I will now turn the conference over to your host, Gar Jackson. You may begin.

Gar Jackson -- Investor Relations

Good afternoon, and welcome to the Tilly's fiscal 2020 second-quarter earnings call. Ed Thomas, president and CEO; and Michael Henry, CFO, will discuss the company's results and then host the Q&A section. For a copy of Tilly's earnings press release, please visit the Investor Relations section of the company's website at tillys.com. From the same section, shortly after the conclusion of the call, you will also be able to find a recorded replay of this call for the next 30 days.

Certain forward-looking statements will be made during this call that reflect Tilly's judgment and analysis only as of today, September 3, 2020, and actual results may differ materially from current expectations based on various factors affecting Tilly's business, including impacts of and the company's actions in response to the current COVID-19 pandemic. Accordingly, you should not place undue reliance on these forward-looking statements. For a more thorough discussion of the risks and uncertainties associated with any forward-looking statements, please see the disclaimer regarding forward-looking statements that is included in our fiscal 2020 second-quarter earnings release, which is furnished to the SEC today on Form 8-K, as well as our other filings with the SEC referenced in that disclaimer. Today's call will be limited to one hour and will include a Q&A session after our prepared remarks.

I will now turn the call over to Ed.

Ed Thomas -- President and Chief Executive Officer

Thanks, Gar. Good afternoon, everyone, and thank you for joining us today. I want to kick off today's call by thanking our entire Tilly's team for their hard work combating this unprecedented and unpredictable COVID-19 environment. I'm very proud of everyone's efforts fighting the unexpected challenges that we have faced together as we approach the six months mark of the pandemic severe impact on our business.

Turning to the second quarter. It began with all 239 of our stores closed for the first two weeks of the quarter. Beginning on May 15 and continuing through early July, we reopened all but four of our stores in a phased approach with new health protocols, customer traffic restrictions, and reduced operating hours in place. Then on July 13, our home state of California ordered the closure of indoor malls.

For the remainder of the quarter, 33 of our 98 California stores which are some of our more productive stores were closed. Despite these complications, our second-quarter results were better than we had anticipated. Total net sales for the second quarter decreased by 16% compared to last year. Net sales from physical stores, including all periods of store closures and net sales from new stores not yet open for a full year, decreased 39.6% compared to last year's second quarter.

Comparable net sales from reopened stores declined 18% collectively during the second quarter following their respective reopening dates compared to last year, while customer traffic in reopened stores decreased more than 30% collectively. E-commerce net sales grew by 128% compared to last year's second quarter. The period of store closures that crossed the first and second quarters allowed us to focus solely on e-comm inventory management and operations, and coupled with our digital-first merchandising mindset, helped us deliver a significant e-com top-line growth. Improved product margins and operational efficiency and profitability from e-comm.

We also expanded our ship from store capabilities introduced curbside pickup in selected stores during the quarter and have just recently identified five or six stores across the country to be utilized as hub stores for additional e-commerce fulfillment, while in-store activity remains significantly reduced. In terms of merchandising, our departments comped negative as a result of the various periods of pandemic-related store closures this year compared to a normal course of business last year, women's, men's, and footwear were our best performers, growth, accessories, and boys were weakest. Under Tricia's leadership, we launched several new brands during the quarter, including BDG by Urban Outfitters, Women's Nike, Free People movement, RVCA Sport, Fjallraven, and several new skate brands. We are excited about the prospects for these new brands and we continue to evolve the Tilly's merchandise assortment.

Turning to real estate. We continue to negotiate with our landlords to reach mutually acceptable solutions for rents we have withheld during periods of store closures, and we continue to negotiate for reductions in future rent obligations in light of the reduced operating hours and customer traffic restrictions associated with the ongoing pandemic. For the most part, we have had thoughtful engagements from our landlords. To date, we have been successful in reaching agreements in principle to address approximately 70% of our total stores.

Due to the sensitivity and evolving nature of these discussions, we will not share any particular details for those negotiations other than to say we appreciate the spirit of partnership expressed toward our company by most of our landlords. In terms of new stores and other capital expenditures, we currently expect to open two new stores during fiscal 2020, with one opening in early October and one opening in mid-November. We sincerely thank those landlords who are understanding about the uncertainties of the current environment and allowed us to defer new store capital expenditures until 2021 for the seven other new stores we had originally planned to open during 2020. We currently expect total capital expenditures for fiscal 2020, including the two new stores and continuing customer-facing and other technology investments to be in the range of approximately $8 million to $10 million.

Turning to the third quarter, the back-to-school season is typically our second most important period behind the holiday season for generating sales. We started the third quarter going up against our two largest sales weeks of last year's third quarter, which got us off to a very tough start in terms of comp sales. We also entered into this year's third quarter with the 33 California stores closed that I referenced earlier. In many of the markets in which we operate, school districts have announced delayed start dates compared to last year and/or have converted to an online-only or hybrid format and these plans continue to evolve.

These factors have had a meaningfully negative impact on our comparable net sales results when compared to last year, which included a normal healthy back-to-school season. Our August total net sales, including the impact of store closures and net sales from stores not yet open for a full year, decreased 35.6% in total, with net sales from stores down 46.3% in e-commerce, up 40.6%. The trend of our comp performance, while still negative, has been improving from week to week with each passing week following the week 1 of August. We are encouraged to have seen a recent uptick in business in certain markets we're in, some schools have reopened.

We cannot be certain if this improving trend from week to week that we saw in August will continue for the remainder of the quarter, nor can we predict whether the current expectations for schools going back will change. Whether the stores will remain open for the entirety of the quarter or how consumer behaviors may change as the pandemic continues to evolve. However, we are trying to be proactive and in the anticipation of a significantly reduced back-to-school period this year, we have planned our third-quarter inventory receipts for stores well below last year's levels. In closing, I want to thank our team again for working so hard to carefully manage our business during this pandemic period.

We are not out of the woods yet, so to speak, but we are focused on growing and protecting our business for the longer-term despite the ongoing pandemic. Mike will now provide more details on our second-quarter operating performance and balance sheet. Mike?

Mike Henry -- Executive Vice President, Chief Financial Officer, and Investor Relations

Thanks, Ed. Good afternoon, everyone. As Ed noted, our fiscal 2020 second-quarter operating results were significantly impacted by the ongoing COVID-19 pandemic, including various periods of store closures, reduced customer traffic and sales results following the Phase 3 opening of our stores throughout the quarter, and the subsequent reclosure of California indoor malls late in the quarter. Details of our second-quarter operating performance compared to last year's second quarter were as follows.

Total net sales for the second quarter were $135.8 million, a decrease of $25.9 million, or 16%, compared to $161.7 million last year. Net sales from physical stores were $83.9 million, a decrease of $55.1 million, or 39.6%, compared to $138.9 million last year. Net sales from stores represented 61.7% of total net sales for the quarter compared to 85.9% of total net sales last year. E-commerce net sales were $52.0 million, an increase of $29.2 million, or 127.8%, compared to $22.8 million last year.

E-commerce net sales represented 38.3% of total net sales for the quarter compared to 14.1% last year. We ended the quarter with 238 total stores, including one RSQ-branded pop-up store, of which 33 California stores were closed as a result of the COVID-19 pandemic. This compares to 229 total stores, including three RSQ-branded pop-up stores, all of which were opened at the public last year. Gross profit, including buying, distribution, and occupancy expenses, was $41.7 million or 30.7% of net sales, compared to $51.7 million or 32% of net sales last year.

Product margins improved by approximately 360 basis points compared to last year primarily due to strong regular price selling upon the reopening of our stores. Buying, distribution, and occupancy costs deleveraged by approximately 490 basis points collectively against lower total sales. Occupancy costs, despite being reduced by $0.4 million on a larger store base compared to last year, deleveraged by 270 basis points against lower total net sales. Distribution expenses deleveraged by 200 basis points primarily due to an increase in e-comm shipping costs of $3 million associated with the significant increase in e-commerce orders.

Buying costs deleveraged 20 basis points on lower total sales. Total SG&A expenses were $34 million or 25% of net sales, compared to $39.6 million or 24.5% of net sales last year. Total SG&A was reduced by $5.6 million compared to last year but deleveraged 50 basis points as a percentage of net sales on lower total sales. Store payroll and related benefits decreased by $7.5 million, primarily resulting from the various periods of store closures during the quarter and careful management of staffing levels upon reopening.

Most other expenses were also reduced compared to last year. The primary exception to this was increased e-comm marketing and fulfillment expenses of $3.9 million due to the significant growth in e-commerce orders. Operating income was $7.7 million or 5.7% of net sales, compared to $12.1 million or 7.5% of net sales last year. This decline in operating results was directly attributable to the impact of the COVID-19 pandemic on our retail stores.

Other income decreased to $0.3 million from $0.6 million last year primarily due to having lower total cash and marketable securities, earning lower interest rates on our investments, and paying interest on borrowed cash compared to last year. Income tax expense was $2.8 million or 34.3% of our pre-tax income, compared to $3.4 million or 26.8% of pre-tax income last year. We cannot accurately predict what our effective income tax rate will be going forward as it is dependent upon our operating results for the back half of the fiscal year, which are also unpredictable in the current environment. Net income was $5.3 million or $0.18 per diluted share, compared to $9.3 million or $0.31 per diluted share last year.

Weighted average shares were $29.7 million for both periods. Turning to our balance sheet. We ended the second quarter with cash and marketable securities totaling $148.9 million, including $23.7 million borrowed under our revolving credit facility and approximately $13.9 million of withheld store lease payments. Excluding borrowed cash and withheld store lease payments, total cash and marketable securities were $111.3 million, compared to total cash and marketable securities of $124.8 million and no debt or withheld store lease payments last year.

We ended the quarter with inventories per square foot down 8.9%. Year-to-date capital expenditures were $4.6 million, compared to $4.8 million last year. Turning to the third quarter. Given the continuing unpredictability surrounding the COVID-19 pandemic, including, but not limited to, its impacts on consumer behavior, our ability to continue to operate some or all of our stores at any point in time or our e-commerce business and the adverse impacts on the back-to-school season so far this year.

We are unable to reliably predict our future sales or earnings at this time and therefore, we'll not be providing any specific guidance. However, we thought it was important to share certain facts to help everyone better understand our current environment. First, as we noted earlier, we ended the third quarter with 33 of our California stores closed. These stores represent 14% of our total store count of 238, and in the aggregate, accounted for $22 million or 14% of our total net sales during last year's third quarter.

On Friday last week, the state of California issued new guidelines, which affected the reopening of businesses, including indoor malls. As a result of these new guidelines, the company was able to reopen 15 of these closed California stores on Monday this week, six more on Tuesday, one on Wednesday, and one more is expected to open on Friday. We do not yet know when the remaining 10 of these California stores will be able to reopen, most notably in Los Angeles County, which has eight of the 10 remaining closed stores. Next, if history is relevant in the current environment, fiscal August has represented approximately 50% of third-quarter net sales for each of the past four years.

Our fiscal 2020 August net sales were $50.2 million, compared to $77.9 million for August last year. However, there are a few reasons to believe that results could be relatively better for the remainder of the quarter. With the delayed back-to-school dates this year, we could see some business shift to later in the quarter than in prior years, although still below prior-year levels overall in the quarter. Comparable net sales results have been improving trend-wise from week-to-week as we go up against smaller sales weeks from last year.

We have also been encouraged to see an uptick in business following the reopening of certain schools within the markets in which we operate. However, we can't be certain that this near-term uptick will sustain for the remainder of the quarter. Finally, collective comparable net sales from reopened stores since their respective reopening dates and through September 1, 2020, compared to the respective comparable fiscal dates of last year have declined 25.5%. Taken together, we believe these factors make it appear more likely than not that our third-quarter net sales will be meaningfully below last year's $154.8 million.

We cannot predict with any certainty what our net sales may specifically be for the quarter, given all the factors we have discussed. We continue to carefully manage inventory levels, as Ed referenced earlier, as well as all expenses in order to protect our cash position, which as of September 2 was $161.9 million, including borrowed cash and withheld store lease payments. Based on all currently available information, we believe our cash position and credit facility availability will be more than sufficient to support our operations for at least the next year. Operator, we'll now go to Q&A.

Questions & Answers:

Operator

[Operator Instructions] Our first question is from David Buckley with Bank of America. Please proceed with your question.

David Buckley -- Bank of America Merrill Lynch -- Analyst

Hi, guys. Thanks. Mike, I appreciate all the details. Just thinking about your gross margin in the third quarter for a minute.

How are you thinking about each bucket in terms of merch margin, buying, distribution, occupancy? And then just looking out into the second half of the year, just your overall outlook for the holiday season, how are you planning for stores with traffic likely to remain weak and the expected e-comm mix shift?

Mike Henry -- Executive Vice President, Chief Financial Officer, and Investor Relations

Yeah. So I'd expect our product margins to remain fairly close to last year, generally speaking, absent some additional store closures or things of that nature. When you look at the year-to-date first half, our product margins are only down a little bit compared to last year. And so I would expect that probably to remain somewhat consistent without knowing specifically where that might fall out, depending on how the rest of back-to-school plays out.

I think you should expect to see some deleverage from distribution and occupancy costs just as we did in the second quarter given the increase in e-comm shipping costs, which is likely to continue as we expect e-comm to continue to be strong double-digit positive during the third quarter. And you're going to see some occupancy deleverage because sales are likely to be down relative to last year, even though we have reduced those expenses in raw dollars, as we noted during the second quarter. So I think directionally, those will probably remain consistent with each other. As it relates to the holiday season, we're planning stores continued to be negative for the rest of the year at this stage based on what we know as of today.

We noted that for the third quarter, we've planned our store inventory receipts significantly below last year. The same remains the case in the fourth quarter. We do think there probably will be something of a larger shift toward e-comm than even we typically see during the fourth quarter. Where exactly those things fall out is anybody's best guess.

David Buckley -- Bank of America Merrill Lynch -- Analyst

Thanks, Mike.

Operator

And our next question is from Jeff Van Sinderen with B. Riley. Please proceed with your question.

Jeff Van Sinderen -- B. Riley FBR -- Analyst

First, let me say good work in Q2. Great to see the metrics better than everyone expected. Obviously, a tough compare, and we see the August metrics. But can you maybe expand on your thinking around back-to-school just given the sequential improvement that you've seen so far week to week? What are you seeing in markets where the kids are actually physically going back to school? I think you've sort of touched on that in your commentary.

Just wondering if there's any more to add to that.

Ed Thomas -- President and Chief Executive Officer

Yeah. We've only had a few markets, Jeff, where that have actually gone back to school. But where we've seen that happen, we've seen an uptick in our business, as Mike mentioned earlier. It's hard to predict whether that sustains itself or whether that's going to happen in every market that goes back to school.

But certainly, we've seen some encouraging signs there some positive signs in terms of improvement in our overall business within those markets. So it's hard to predict. I mean, look, there's no material difference. There's not been a material difference in performance from off-mall to mall stores.

Traffic has generally been down everywhere, and I don't think we're alone with that. And where traffic has improved, we've seen a relative improvement to our business, too.

Mike Henry -- Executive Vice President, Chief Financial Officer, and Investor Relations

Yeah. And I'm looking at the market performance specifically here, Jeff. So Florida has been very strong for us in the last two to three weeks. Colorado, Utah has been very strong.

Arizona and Nevada have been positive for two to three, four weeks in a row now. And even though the California stores that we mentioned the indoor mall stores that just reopened, they've had strong positive comps these last couple of days. A couple of days doesn't make a long-term trend, but it's at least encouraging. And that's part of what we're referencing and seeing an uptick as some of these markets, as well as the very near-term reopening comps from the stores that have been closed for a month and a half.

Jeff Van Sinderen -- B. Riley FBR -- Analyst

OK. So it's possible we could gain some momentum here over the next month or so. I guess we just have to wait and see.

Ed Thomas -- President and Chief Executive Officer

Yeah, it's possible. It's why we phrased our thoughts about the third quarter. In particular, August as a percentage has been very consistent. But this year is not a normal August, obviously.

I'd like to think that August was overly depressed because of the push out of back-to-school days and then again, seeing this relative improvement from week-to-week end trend, as well as the positive comps we've seen overall. The last two days, we've had total comp store sales, excluding e-comm positive the last two days. So that's a good sign, too. Again, we don't know if that's going to sustain.

We don't know if it's just a temporary blip. It's hard to know anything these days, but at least there are some positive signs that maybe we could recover a little ground in the remainder of the quarter as we go up against much smaller revenue weeks than what was in August. Each of the weeks of August is bigger than any other week for the remainder of the quarter, so we've taken the hits of going up against the high-volume weeks. That will be interesting to see how much ground we can recover and if we can recover through the remainder of this over -- this quarter, sorry.

Jeff Van Sinderen -- B. Riley FBR -- Analyst

Right. OK. That's helpful. And then, Ed, maybe you can just kind of give us a sense of your longer-term thinking at this point around the concentration of your business in digital versus brick and mortar.

I know you talked about negotiating rents with the landlords. Your e-comm business, I think, was approaching 40% of your business in Q2, which certainly wouldn't have expected that if you'd asked me last year, but it's great to see. And then just maybe thinking around how you might evolve your real estate strategy as e-commerce grows.

Ed Thomas -- President and Chief Executive Officer

Well, we've said for quite a while that we think before pandemic, we thought there was ample room for growth in both with physical stores and e-comm, and we thought we were very underdeveloped in e-comm, which we were. So the time and effort that we've put in the last few months dedicated to e-comm and being able to concentrate more on it has shown us how much better it can be. But I don't think we -- I know we have not peaked at all as far as the e-comm business goes. I think we got a lot of runway ahead of -- a positive runway ahead of us.

In terms of physical stores, I think it's a moving target right now. We have to understand -- I think understanding how particular locations, whether it's off-mall or mall, what their tenant mix ends up with is a big question mark for all of us in the industry. So we're going to be pretty -- like we always are, we're going to be pretty careful to make sure we understand the co-tenancy that we're going to -- if we're going to go into a particular location who's going to survive and who won't. But we're going to continue to open stores.

There's no question about it. And I would say that it's going to still be a combination or a continuation of our strategy of opening off-mall and mall stores, both.

Jeff Van Sinderen -- B. Riley FBR -- Analyst

And hopefully, those rents will be substantially lower than they would have been pre-COVID. I'll leave it there and take the rest off-line. Thanks very much.

Ed Thomas -- President and Chief Executive Officer

OK, Jeff. Thank you.

Operator

Our next question is from Mitch Kummetz with Pivotal Research. Please proceed with your question.

Mitch Kummetz -- Pivotal Research Group -- Analyst

Thanks for taking my questions. Definitely appreciate all the color, particularly around back-to-school. You guys give more information than most. But that being said, I'm still hoping for a little bit more just to make sure I better understand the trajectory.

So you gave the kind of the August numbers. You also sort of split it out first two weeks, second two weeks. I think first two were down 45%. I think I backed into the second two down around 19%, but the first two days of, I guess, September sound like they're positive.

Is there any way you can give August by week? Or can you speak to maybe the last week of August or...

Mike Henry -- Executive Vice President, Chief Financial Officer, and Investor Relations

Yeah. Directionally, you're right, Mitch. So the first week of August, we were down over 50%. In the second week, we were down almost 40%.

And the third week, we were down 24%, and the fourth week grew down 14%. So it's been moving meaningfully by week. This week, we referenced the last two days being positive overall. The quirk of this week is that Monday, we were going up against Labor Day last year.

Labor Day was almost as early as it could possibly be. Last year, it was Monday, September 2, which the comparative date was Monday, August 31 this year, we'll have the positive side of that compare this year coming up this Monday, which will be this year's Labor Day, which is as late as it can possibly be this year. So we did take a significant negative entering this week because of that Labor Day compare. We should get the offset of that next week.

Trajectory-wise, it just looks like things are continuing to improve from week to week. And as we referenced, where we have seen schools go back, we're seeing some nice upticks in business. And again, we mentioned early results from the California reopened stores. So there's a reason to hope a little bit.

Ed Thomas -- President and Chief Executive Officer

We've seen enough now much the schools going back. We've seen enough of a change in our trends to give us a little bit more confidence in how things will proceed going forward.

Mitch Kummetz -- Pivotal Research Group -- Analyst

OK. And do you guys have any metrics that you can speak to on like at -- a company reported earlier this week that said by the end of August, 65% of schools were back versus 95% a year ago. And when they said 65 back, that meant a combination of in-person and virtual versus 35 that had been delayed. I don't know if you have any numbers that you could speak to around that in the markets where you guys have stores or even...

Ed Thomas -- President and Chief Executive Officer

Off the top of my head, no. But, you know, it really varies significantly not only by state but within the state itself. So for example, right in our backyard here, LA County is completely different than Orange County. And it really is a moving target to try to figure out, OK, when are they really going to go back, stuff like that.

So we don't have enough that we could share with you other than it keeps changing.

Mike Henry -- Executive Vice President, Chief Financial Officer, and Investor Relations

Yeah. The last time I looked at this a couple of weeks ago, and I think I had counted 75 stores that had a meaningful delay in their back-to-school timing relative to last year. But again, this keeps changing every single week and, sometimes, within the week. So I haven't kept up with it, honestly.

Mitch Kummetz -- Pivotal Research Group -- Analyst

And then, Mike, trying to hope to strip out the impact of the closed California stores, and I think you said $22 million in sales in the third quarter of last year. And I think you also made a comment that August typically represents 50% of the quarter. So is it fair to say that those stores were about $11 million in August last year? Or is it less than that because California typically goes back to school later?

Ed Thomas -- President and Chief Executive Officer

I don't have the August breakout of those stores in particular. But given the relative penetration of August, it's going to be pretty close to that, plus or minus.

Mitch Kummetz -- Pivotal Research Group -- Analyst

OK. OK. And then just a couple of quick ones. Got it.

On the margin, so store payroll was down $7.5 million year over year in the quarter. I would assume that it will be down as well in Q3, but down less than that just given how many store opening days you have this quarter versus last quarter. Is that the right way to think about it?

Mike Henry -- Executive Vice President, Chief Financial Officer, and Investor Relations

Yeah. I think that's a fair expectation, certainly. I would expect it to be down year over year, but yes, not nearly as much as it was in Q2 with a caveat that stores don't reclose.

Mitch Kummetz -- Pivotal Research Group -- Analyst

Sure. And should shipping deleverage be less negative in Q3 as ship has -- e-comm penetration probably goes down a little bit again just because you're going to have more stores open or...

Mike Henry -- Executive Vice President, Chief Financial Officer, and Investor Relations

It just depends what the balance of e-comm relative to stores is. And how those play out is hard to say for sure.

Mitch Kummetz -- Pivotal Research Group -- Analyst

OK. Fair enough. All right. Thanks, guys.

Ed Thomas -- President and Chief Executive Officer

The good thing is we've really expanded our ability. We've always had the ability to ship from store, but we have a lot more flexibility of where we can shift from in addition to our e-comm fulfillment center. And that should help us long term.

Mitch Kummetz -- Pivotal Research Group -- Analyst

OK. Thanks again. Good luck.

Ed Thomas -- President and Chief Executive Officer

All right. Thanks much.

Operator

Our next question is from Sharon Zackfia with William Blair. Please proceed with your question.

Sharon Zackfia -- William Blair -- Analyst

Hi. Good afternoon. I guess I had a question that had less to do with back-to-school and just how you're thinking about driving urgency in the business. And I know historically, you've used a lot of events, really, to drive excitement around Tilly's.

And in this environment, I'm just curious how you think about driving that excitement for consumers, whether it's to come into the stores or to go online.

Ed Thomas -- President and Chief Executive Officer

Well, hi, Sharon. Yes, the days of the events and localized events are temporarily suspended until we get to somewhat of a normal period out there with store traffic and people shopping patterns. But we haven't only used events to drive traffic to us. And I think you know well that, generally, we don't promote much as a company.

So it's not going to be price-driven. We continue to work with our loyalty base, our loyalty customers, and work with them, keeping contact with them, which those customers end up being the best multichannel shoppers for us. And then continuation of introduction of new categories or new brands has always been part of our formula, and we're going to continue to do that going forward. So that's pretty much all we know right now.

Sharon Zackfia -- William Blair -- Analyst

I guess a follow-up on that. Do you have any stats on how much loyalty is comprising of your sales at this point versus kind of pre-pandemic?

Ed Thomas -- President and Chief Executive Officer

We do, but we don't disclose it. Sorry.

Sharon Zackfia -- William Blair -- Analyst

Thank you.

Operator

And our next question is from Matt Koranda with ROTH Capital Partners. Please proceed with your question.

Matt Koranda -- ROTH Capital Partners -- Analyst

Hey, guys, thanks. You shared the comp cadence earlier for August, which is super helpful. But I was wondering, can you just clarify that was all in year-over-year comparison, including e-com? Is that correct?

Mike Henry -- Executive Vice President, Chief Financial Officer, and Investor Relations

Yes. That did include e-commerce during that cadence we shared.

Matt Koranda -- ROTH Capital Partners -- Analyst

OK. And any material split in terms of the way that that performed within the month? I mean, I would assume it was relatively steady, but any help just on the cadence there?

Mike Henry -- Executive Vice President, Chief Financial Officer, and Investor Relations

The week-by-week cadence?

Matt Koranda -- ROTH Capital Partners -- Analyst

Yes.

Mike Henry -- Executive Vice President, Chief Financial Officer, and Investor Relations

Yeah. So we shared that just a few minutes ago when Mitch asked about that. So week 1, we were down a little over 50%, and then it --

Matt Koranda -- ROTH Capital Partners -- Analyst

Mike, sorry, just to clarify, I was talking about e-comm specifically, not just the consolidated. But I'm just trying to parse out store versus e-comm comparison in the month there.

Mike Henry -- Executive Vice President, Chief Financial Officer, and Investor Relations

E-comm strengthened as the weeks went on, too. So e-comm was up double digits each week, but it continued to strengthen as the month went on. So it was up in the teens and week 1, up over 40% in week 2 than almost 60% in week 3 and more than 60% in week 4. So it's been accelerating to the positive just as stores.

I guess I've been getting less negative.

Matt Koranda -- ROTH Capital Partners -- Analyst

Got it. No, that makes sense. OK. That's very helpful.

And then just curious if you could talk about inventory position and how we feel there. Obviously, you guys have done a very nice job managing that down. But are we light anywhere? Are we heavy in particular areas? And then maybe you could just talk generally about sort of regional differences in sort of merchandise sales. I mean, what are you seeing in areas where you've got physical back-to-school versus kind of virtual? Any material differences to point out for us?

Ed Thomas -- President and Chief Executive Officer

Well, as far as the inventory goes, our inventory is in great shape. It's probably never been as clean as it is. Tricia and the merchandise team did an outstanding job of managing through from the beginning of managing, making sure that we were very surgical in our approach to cancellations and being able to capitalize on things that we saw that were good. There's always going to be some spots in the inventory, maybe a product or so that is such a great sell that you're not going to have enough, but that's not been caused by anything related to the recent environment at all.

I would say nothing out of the norm. The inventory is really in good shape. And what's been difficult is to forecast what our store sales are going to be going forward because of all the volatility in the environment stuff, and we're somewhat in more of a chase mode for certain inventory than we normally would be because of that. But so far, so good.

Matt Koranda -- ROTH Capital Partners -- Analyst

OK. Very helpful. And then maybe one for Mike. I noticed cash balance still up in the month of August, I guess, with the September ending balance that you have shared.

Anything to note there? I would just assume, I guess, that you guys are still managing inventory very effectively and flushing cash. But anything else that we should be aware of there or think about that pertains to kind of working capital?

Mike Henry -- Executive Vice President, Chief Financial Officer, and Investor Relations

Well, again, any specific numbers are hard to speak to because it just depends on where sales go, and we've acknowledged it's impossible to predict anything right now. That being said, we've run all kinds of different scenarios and trying to project our business and what actions we need to take, what we need to do to protect inventory positioning, protect balance sheet positioning. We expect to continue to have well more than $100 million of cash and investments on a go-forward basis. For the remainder of this year, not expecting to have any meaningful problems from a balance sheet perspective.

Thankfully, we entered this whole pandemic situation with an extremely strong balance sheet. And we've been very, very diligent and serious about managing inventory and expenses in this pandemic period. So I feel as good as I can about our balance sheet in this environment and really not anticipating having any issues.

Matt Koranda -- ROTH Capital Partners -- Analyst

OK. Makes sense. Maybe I'll sneak one more in here. Sorry, guys.

Just curious if you got -- like can you give us a sense for how you're sort of thinking about market share? I know back-to-school, and there's a lot of gyrations in August, and the year-over-year comparisons are kind of a little wacky here. But how are you guys thinking about your overall market share going forward? It just seems like maybe you guys have outperformed a couple of specialty retailer peers, but are you losing share to big box? I mean, any general whether you guys are tracking market share and how we should be thinking about that going forward, heading kind of Q3, Q4?

Ed Thomas -- President and Chief Executive Officer

Yes. I mean, my thoughts with all the store closures, both specialty and department stores, in particular, I think it's an opportunity to gain more market share sooner rather than later. So I think our merchandise assortment is unparalleled out there by most retailers, and I think it's an opportunity for us to gain new customers as a result of certain store closures or chain closures.

Matt Koranda -- ROTH Capital Partners -- Analyst

Makes sense. Thank you, guys.

Operator

And we have reached the end of our question-and-answer session, and I will now turn the call back over to Ed Thomas for closing remarks.

Ed Thomas -- President and Chief Executive Officer

Thank you all for joining us on the call today. We look forward to sharing further business updates with you following the conclusion of the third quarter and Black Friday weekend. Have a good evening, everyone.

Operator

[Operator signoff]

Duration: 42 minutes

Call participants:

Gar Jackson -- Investor Relations

Ed Thomas -- President and Chief Executive Officer

Mike Henry -- Executive Vice President, Chief Financial Officer, and Investor Relations

David Buckley -- Bank of America Merrill Lynch -- Analyst

Jeff Van Sinderen -- B. Riley FBR -- Analyst

Mitch Kummetz -- Pivotal Research Group -- Analyst

Sharon Zackfia -- William Blair -- Analyst

Matt Koranda -- ROTH Capital Partners -- Analyst

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