Steven Madden, Ltd. (SHOO) on Q1 2021 Results - Earnings Call Transcript
Operator: Good day and thank you for standing by. Welcome to the Q1 2021 Steve Madden Limited Earnings Conference Call. At this time all participants are in a listen-only mode. After the speakers presentation there will be a question-and-answer session. . I would now like to hand the conference over to your speaker for today, Ms. Danielle McCoy. Please go ahead.
Danielle McCoy: Thanks, Latana. Good morning, everyone. Thank you for joining our first quarter 2021 earnings call and webcast.
Ed Rosenfeld: Thanks, Danielle. Good morning, everyone, and thank you for joining us to review Steve Madden's first quarter 2021 results. In light of the continued challenges posed by COVID-19, we were very pleased with our results in the first quarter, which significantly exceeded our expectations for both revenue and earnings. Our business accelerated meaningfully in March with sharp improvement in revenue trends in our Retail segment performance at our wholesale partners. Undoubtedly, we have some of this improvement to the impact of the government stimulus as well as the vaccine rollout and easing government restrictions. But we believe the improvement we saw, particularly in our flagship Steve Madden brand, exceeded that of the overall fashion footwear category, which we attribute to an outstanding trend right merchandise assortment, much of which we only began delivering later in the quarter, due to supply chain delays.
Zine Mazouzi: Thanks, Ed, and good morning, everyone. Our consolidated revenue in the first quarter increased 0.5% to $361 million, compared to $ 359.2 million in the first quarter of 2020. Our wholesale revenue declined 3.7% to $291.4 million, compared to $302.7 million in the prior year period. Wholesale footwear revenue decreased 7.8% to $216.8 million, which was due to the impact of COVID-19 and supply chain disruption. Wholesale accessories and apparel revenue increased 10.3% to $74.6 million driven by double-digit percentage gains in both Steve Madden and private label handbags. In our Retail segment, revenue increased 27.5% to $67.5 million, driven by outstanding performance in our e-commerce business. Total e-commerce grew 89.2% including 112.4% growth in our Steve Madden e-commerce business and represented 54% of our total Retail segment sales. We ended the quarter with 215 company-operated retail stores including 66 outlets and seven e-commerce sites as well as 17 company-operated concessions in international markets. Due to local government orders one-third of our stores were closed for some period during the first quarter. As of today, approximately 45% of our stores in Canada are closed, but the remainder of our stores are open, although hours of operation remained reduced in over 90% of the stores. Turning to our licensing and first cost segments. Our license and royalty income was $1.5 in the quarter, compared to $2.2 million in last year's first quarter. First cost commission income was $0.6 million in the first quarter of 2021, compared to $1.2 million in the first quarter of 2020. Consolidated gross margin in the quarter increased 130 basis points to 38.5% compared to 37.2% in the prior year. Wholesale gross margin declined 20 basis points to 32.3% compared to 32.5% last year, which includes a 10 basis point increase in wholesale footwear and a 10 basis point decrease in wholesale accessories and apparel. Retail gross margin rose 370 basis points to 63.5% compared to 59.8% primarily driven by lower promotional activity and a higher penetration of e-commerce sales. Operating expenses for the quarter decreased 13.2% to $103.5 million compared to $119.3 million in last year's first quarter, which reflects the company's expense control measures. As a percentage of revenue, operating expenses improved to 28.7% in the first quarter of 2021 compared to 33.2% in the prior year period. Operating income for the quarter totaled $35.6 million or 9.9% of revenue compared to last year's first quarter operating income of $14.2 million or 4% of revenue. Our effective tax rate for the quarter was 21.1% compared to 15.2% in the same period last year. Finally, net income attributable to Steve Madden Limited for the quarter was $26.9 million or $0.33 per diluted share compared to net income of $13 million or $0.16 per diluted share in the first quarter of 2020.
Operator: You have a question from the line of Camilo Lyon with BTIG.
Camilo Lyon: Thank you. Good morning, everyone. Nice job out of the gate here in Q1. Ed, I was hoping you could just shed a little bit more color on the supply chain commentary that you made and sort of the influences that it had on Q1 and Q2. I was expected having Q2? And any sort of shift that you might be seeing in the business to help us better frame – separate what's going on from the macro shift supply chain perspective as early and then separating that from the underlying trends, which seems to be pretty robust given the commentary on the sell-through that you're seeing and also what you're seeing in your e-commerce? That's my first question.
Ed Rosenfeld: Sure. Yeah, the supply chain has had a pretty significant impact on the business in first half year. It was not as bad as we initially feared in Q1, but it was still a significant impact. And I think that we called out approximately – or an expectation of about $30 million in Q1 on the last call of revenue impact. And I would say, it actually ended up being only about half of that.
Camilo Lyon: That's great color. And then my second question is on the gross margin front. You mentioned flying more goods I think cost there on air up 100% and probably similarly on boats. Can you talk about any other puts and takes on the gross margin line and how we should think about that? Is that unfold for the balance of the year? And maybe just one final one. Look like, your – when the supply chain pressures should ease or are expected to ease?
Ed Rosenfeld: Okay. Sure. The second part of your question you were breaking up there, but I think I got the gist of it which was when do we think that the supply chain will – pressure will ease, is that correct?
Camilo Lyon: Yes that is.
Ed Rosenfeld: Okay. Yeah. So in terms of gross margin, yeah, there's a lot of puts and takes this year. We guided to – you asked about the year, but maybe I'll talk about Q2 since that's how we provided guidance. I think we do have a couple of pretty significant headwinds. The biggest one is the freight. As you point out ocean rates are up over 100%. Airfreight rates are up close to 200%. So all in all that's creating a pretty significant headwind on the freight. I would say that's going to be over 200 basis points pressure from freight in Q2 something like – I think we estimated about 210 basis points. And then we've got the non-renewal of GSP which is also still a headwind. We're certainly hopeful that that gets resolved quickly. But if not that's another about roughly 60 basis points of headwind in Q2. All that being said, I think that even with those headwinds, I think that our – we're targeting to have flat gross margins to last year in Q2 on a consolidated basis. And then in terms of when the supply chain gets better, look I think, as I mentioned again in the earlier remarks that while we did have that temporary reprieve. Imports are surging again into the LA ports. And so I think that we're going to continue to see some pressure here on the supply chain. I think that I saw the LA port director said that he anticipated that the congestion would last I think his words were well into the summer or well through the summer. So it's something we're going to have to contend with I think is these extended lead times.
Camilo Lyon: That's great color. Thank you, Ed. And good luck with the Q2 season. Thank you.
Ed Rosenfeld: Thanks, Camilo.
Operator: You have a question from the line of Paul Lejuez with Citi.
Paul Lejuez: Excellent. Ed, can you talk more about how retailers are planning the second half businesses and how that differs amongst your partners by a channel, maybe and also curious if you can talk a little bit more about private label. Do that stand in 1Q 2021 versus where you were last year as a percent of the wholesale business? And where do you see that thing is going this year in total, either relative to last year FY 2019, however you guys are thinking about it? Thanks.
Ed Rosenfeld: Yeah. So I don't have a real update for you on how retailers are planning their businesses for fall. When we talked on the last call, we talked about the fact that our retailers were planning fall down and it was a pretty wide range. Some were planning it down modestly some down as much as 15% to 20%. This is all compared to 2019. And what I'll tell you is I think all of our retailers are relooking at their fall plans right now given the improved performance over the last two months. And I think again, we think that, the improvement in our trend has even exceeded that of our peers in our category. So I think that we're encouraging them to relook at their plans for us as well. But we really haven't received any firm updates from them. So that's something, we'll have to follow-up with you on the next call. In terms of private-label as a percentage of the wholesale business, look that was about – I think in 2019, I think we were running around 31%. And then last year it went up to that 35% is obviously some of those mass merchant customers that are big private label customers for us really remained open throughout the lockdowns and took share. This year, I think, you'll see that tick down back to around a third of our wholesale business.
Paul Lejuez: Got it. Just a follow-up. Anything you're seeing on the import cost side outside of freight that will drive some of your overall cost that you see is higher? And how are you thinking about pricing to reflect that?
Ed Rosenfeld: Yes. There is some pressure on materials. And then also, of course, the dollar has weakened a little bit, again, particularly against the Chinese RMB. So, I think, there's a little bit of pressure there. At this moment though, it has not been super problematic for us. We haven't seen a significant increase in our overall FOB costing from our factories. But it will be something we'll have to continue to watch and to work hard on. We are taking price up selectively particularly, because of the strength of the product and the demand that we're seeing from the consumer right now. So I think you will see a modest increase in AUR from us.
Paul Lejuez: Thank you. Good luck.
Ed Rosenfeld: Thank you.
Operator: You have a question from the line of Jay Sole with UBS.
Jay Sole : Great. Thanks so much. And I'm just wondering if you could maybe give us a little bit more color on the top line guidance. It sort of implies that on the -- if we look at the 1Q result on the top line versus 2019 it was down about 13%, but the 2Q guidance looks like it's going to be down about 19%, 20% somewhere in that range. Is it more like the wholesale business where you see like deceleration? Or is it just having enough inventory to supply the retail channel. Can you just give us a little bit of color on where you see the change in from 1Q to 2Q within the segments?
Ed Rosenfeld: Yes. Yes, it's a good question. So it really is -- the deceleration really is coming from the wholesale business and I'll explain that. But the Retail segment, we feel good about the trend there. And we -- as I mentioned, we think we can continue to see nice improvement over 2019. In fact I think we can be up double-digits in Q2 on a percentage basis compared to 2019 in the Retail segment. So the wholesale business, I think, there's a couple of things, if you're looking back at Q2 of 2019 that we should point out related to our private label business. The first is that back in 2019 that's when Payless went bankrupt, and announced they were liquidating. And one of our private label customers saw that as a market share opportunity and actually temporarily expanded the space on the floor devoted to footwear. They actually put up pallets outside of the -- around the ring of the shoe floor, and brought in a lot of products in the categories where Payless had historical strength. And so we shipped in about $25 million for that program in Q2 of 2019 that we are not anniversarying this year. So that's the biggest piece. And then on the private label -- that's in footwear. On the private label accessories side, one of our big private label customers, there is bringing in their -- taking delivery of their back-to-school sets in July this year and those came in June of 2019. So that's another $7 million or so. So just think about the $32 million headwind from those two factors in our private label business. And that's about a 700 basis point impact on the consolidated revenue. So I think that really explains the deceleration that you're looking at.
Jay Sole: Got it. Thanks so much. And then maybe just one more on the European JV acquisition. Can you just give us a little update on why now why it strategically made sense today? And sort of what you see the potential for that business going forward? I mean, you say you think it can be a significant growth driver.
Ed Rosenfeld: Yes. Look that's been just a really great story for us since we started the JV. It's been really strong and steady growth. And we really felt the business had just reached a place of a scale, where it made sense. And we thought really we've just proven that the brand really resonates in the market and that we have a big opportunity there and we need to step on the gas and we thought we could do that best with full ownership of our business in the region. But as we pointed out this is a business unlike the rest of our business, this business was up 21% in 2020 despite COVID. And so I think that really demonstrates the momentum that we have in the market. And also it's a reflection of our digital-first positioning there. As I mentioned the business will be over three quarters in digital channels this year. And it's just got really strong momentum. Again, it was up 21% last year it will be up more than that this year. And so I thought really now was the -- we thought now was the time to take it in-house fully.
Jay Sole: Got it. Thank you so much.
Ed Rosenfeld: Thank you.
Operator: You have a question from the line of Janine Stichter with Jefferies.
Janine Stichter: Hi, everyone and congrats on a great results. And I was hoping you could talk a little bit about the fashion trends you're seeing. I think you mentioned seeing some improved trends in the dressy category. On the last call, you had said, it was kind of -- you're seeing some green shoots, but was still kind of a small percentage of the business a limited number of styles that were trending well. Maybe elaborate just on what you're seeing now? Is it a bigger percentage of the business? How should we think about that trending going forward? And then how do you manage the mix of fashion versus more casual styles we still kind of try to figure out where the consumer is positioned? Thank you.
Ed Rosenfeld : Yes. Dress shoes have really come on and we're seeing some real strong performance in that category. We've got these strippy dress sandals that are performing very well. We've got some pumps that are doing well though we don't have enough of them. But that's a category that we feel, I would say, considerably better about than even when we spoke to you last time and in terms of penetration, it's approaching 2019 levels for us now. No I don't think that's true for the market overall. I do -- I really think we're taking share in that category and capturing a disproportionate share of consumer dollars in this category. But I think we're a destination for these kind of products. And I think we've executed really well in the product that we're delivering. And frankly, I think some of the other brands in the market deemphasized this category and it's given us an opportunity. So that's a category we feel good about, but there's a lot of other things really working for us too. I called out doing very well in fashion sneakers. Our flat sandals with embellishment and ornamentation are phenomenal. So we've got a lot of products working a lot of different trends reflected in these products. So whether it's ornamentation or braided detailing, quilting, there's a whole bunch of things that were utilizing on the product and that the customers responding to.
Janine Stichter: Great. And then, just a follow-up on pricing. I think you talked about potentially seeing AUR increases as you try to offset some of the import cost headwinds. Is that on like-for-like price? Is there anything going on with mix that would offset those price increases?
Ed Rosenfeld: No, I don't see anything in mix that would offset it. And, yes, there will be some AUR increases on like-for-like products.
Janine Stichter: Great. Thanks very much.
Operator: You have a question from the line of Susan Anderson with B. Riley.
Susan Anderson: Hi. Good morning. Thanks for taking my question. Nice to see the improvement in the quarter. I was wondering if maybe you could give a little bit of color on just against the revenue in the quarter. I'm assuming you saw maybe a pickup in March. And then, I'm curious if that's carried into April, it looks like you're guiding second quarter to be at similar growth levels as first quarter. Is most of that the port issue holding back inventory? Or is part of it still consumers kind of holding back on their more fashionable footwear purchases.
Ed Rosenfeld: Yes. We did see revenue trends improved throughout the quarter, as March was better, considerably better than January and February, both in our actual sales in our Retail segment, as well as in our sell-through and wholesale. And we've seen that improve -- excuse me, continue into April. I think that, in terms of the Q2 revenue guide, I think we've discussed some of the headwinds there. We talked about the headwinds in private label and obviously, supply chain. But absent that, yes, we do see the trends continuing.
Susan Anderson: Great. And then, just on the gross margin in the first quarter, I think, retail was up, which, I think, was e-commerce and lower promotion, wholesale slightly down. I guess is there any difference in promotions in the wholesale channel? Or what other different dynamics are going on there that drove that down? And should we expect that difference also for the second quarter?
Ed Rosenfeld: Yes. So, again, lots of puts and takes on the gross margin. If you look at the wholesale, keep in mind, while you did have a tailwind, because one year ago we had inventory reserves that we took when -- at the onset of COVID. But that was really offset by some headwinds this year, which were namely freight and GSP, the non-renewal of GSP. And then, on top of that, you had some mix shifts which were negative. So in both footwear and accessories, both wholesale footwear and wholesale accessories in apparel, private label made up a larger percentage of the mix this year, compared to last year, which is a mix negative. And then even between the segments, with wholesale accessories and apparel being up and wholesale footwear being down, that's a mix negative as well. So I think that, that's sort of how we got to the overall wholesale down 20 bps.
Susan Anderson: Got it. Okay. That's helpful. If I could just add one more on Europe. With the outperformance there, it sounds like, given the channel, it mainly operates and that's obviously helping. But are you also seeing any differences in what consumers are buying in Europe? Is it more fashion? Or is it very similar to what you're seeing domestically?
Ed Rosenfeld: Generally speaking, what's working in Europe is very similar to what's working here. We've been doing very well with fashion sneakers in Europe, but that's -- we're also doing -- fashion sneakers are also strong for us here in the US.
Susan Anderson: Great. That’s helpful. Thanks so much. Good luck for rest of the year.
Ed Rosenfeld: Thank you.
Operator: We have a question from the line of Laura Champine with Loop Capital.
Laura Champine: Good morning and thanks for all the granularity about what's going on with the wholesale business in Q2. But I did want to talk about why you've cited COVID-19 as an additional demand risk in Q2, because we're just hearing about a significant bounce back in demand for footwear and apparel and increased mall traffic. So it's just a little counter to what we've been hearing on the ground. So why is COVID-19 still a call out for risk for Q2 demand?
Ed Rosenfeld: I think that what we were -- I don't know that we're talking about consumer demand so much, as the overall environment is still impacted by COVID-19. Our wholesale customers placed orders dramatically down for spring of 2021 because of COVID-19 and the impact that they were seeing in their business. And again, while the demand has picked up and the sell-throughs have picked up, we haven't been able to chase into that demand fully, because of supply chain disruption, which is also a result of COVID-19 ultimately. And so, it's still impacting the overall business in a significant way. I mean -- and as we know, store traffic is still down significantly from pre-pandemic levels. Yes, it's coming back. But I don't -- I think it's hard to make the argument that there's no -- the Q2 of 2021 looks the same way it would if there had been no pandemic.
Laura Champine: Yes. Got it. Would you characterize the reorders, because I know initial order patterns were weaker at department stores, et cetera. Have the reorders met your expectations in Q2?
Ed Rosenfeld: Yes. The demand for reorders has been good. Look, because of supply chain disruption, we haven't been able to capitalize on all that potential reorder business that we otherwise would have.
Laura Champine: Totally got it. But can you quantify the supply chain impact in terms of sales for Q2?
Ed Rosenfeld: Well, as I said earlier, I mean, it's very tough, because now you're getting into very hypotheticals. Like, if we had delivered the initials on time, how much would we have been able to get in reorders and et cetera. But, again, if we think that overall we're estimating $15 million for Q1 I think, it's that much or a little bit more for Q2.
Laura Champine: Got it. Thank you.
Operator: You have a question from the line of Erinn Murphy with Piper Sandler.
Erinn Murphy: Great. Thanks. Good morning. I wanted to follow-up, Ed, on the fashion conversation. There's been on the apparel side a lot of talk of a change of silhouette in denim. And then clearly when we've seen that in the past, it's reshaped the footwear option. So, I guess, my question for you is, does dressy which seems like that's rebounded well. Does that continue to work in that -- so with the silhouette change? Or is there kind of an opportunity for sneakers to kind of continue to accelerate? Just curious on what you're seeing in terms of the next three to six months in terms of the complement of the silhouette?
Ed Rosenfeld: Yes. Look, I think, there's a lot of different categories that we can play in with the new silhouette in denim or and bottoms. And so, I think, overall, it's a good thing. We always like a change in silhouette, because it just drives new footwear purchases. But I don't see it resulting in a significant shift in our category, by category mix linked with that.
Erinn Murphy: Got it. Okay. And then, maybe a little bit on the accessory business. That was definitely a standout this quarter. And I think it grew maybe 4% versus 2019. So do you expect that rate of change versus 2019 to continue in the accessory business and here in the second quarter and then throughout the year? And then what are you seeing in price in the category, because a lot of your higher peers in terms of accessible luxury or luxury have been taking price and seeing that stick?
Ed Rosenfeld: Yeah. So we do feel good about what we're seeing in that wholesale accessories and apparel business. And I think our Steve Madden handbag business is really as strong as it's ever been. And we also had a strong performance in private label there. I will caution folks that I think there was also a little bit of a benefit of some timing shifts in the quarter that helps that segment. Interestingly the supply chain for that particular segment may have actually even helped us in the first quarter, because accessories was in particular where we were able to pull forward a lot of that stuff that we thought was going to go out into April into March. So we didn't really lose much at the back end of the quarter. And in fact at the beginning of the quarter there had been some products that had slipped from December into January because of supply chain disruption. So they may have even been a beneficiary just in that quarter of the supply chain disruption. And then going into Q2, I talked about how some of those products that -- in private label that are going to move out the back-to-school sets from June to July. So you will see that slowdown considerably. But, nevertheless, overall I think the -- if we forget about the quarter-to-quarter shifts, the trend there is quite good. In terms of price, taking a little bit of price but not a lot. I think we still want to make sure we're really driving a lot of value in these products.
Erinn Murphy: Perfect. And then just last question if I may. On the GSP, I know it hasn't been renewed and I think you called it out as a 60 basis point headwind just for the second quarter. If it gets renewed, do you take a true-up of the headwind that it's been year-to-date? Or how does that work just from an accounting perspective assuming it does get approved at some point in the near-term?
Ed Rosenfeld: Yes. We would be -- for instance, if it were to be approved in Q2, we would be able to reverse the expense that we booked in Q1.
Erinn Murphy: Great. Thank you and all the best.
Ed Rosenfeld: Thanks Erinn.
Operator: You have a question from the line of Dana Telsey with Telsey Group.
Dana Telsey: Good morning and nice to see the progress Ed. As you think about on the supply chain, we talk about, obviously, the port congestion here in the U.S. on the West Coast. What about from Asia and China, is there any headwinds there to note in terms of getting goods out from over there? And then I have a follow-up.
Ed Rosenfeld: Yeah. I think we have seen that piece of it get a little bit better. Obviously the shortage of containers was a big challenge and we're starting to see that lessen a little bit or get better I should say.
Dana Telsey: Got it. And then digital has been an area of strength. Any callouts on digital and what's driving the margins higher? Where could margins go on digital? And how is the cost of digital marketing and the benefits that you're seeing?
Ed Rosenfeld: Yeah. I appreciate the question because that's something we're just really excited about what we're seeing in our owned and operated e-commerce business. It's been on a very strong trend, and then in Q1 as I said earlier really even accelerated further. And our Steve Madden global e-com business owned and operated was up 112% over the prior year. And the team is just doing a great job. I think that we've really -- we continue to get more efficient and effective with our digital marketing strategies and seeing really strong return on ad spend in our performance marketing channels and the team is doing a great job of driving that, and also really exciting work on the influencer front. And I think the team is really -- we've got great products but they've done a great job of taking great items and making them huge by pouring gasoline on the fire with effective marketing and that's pretty exciting. Also some enhancements in terms of what we're doing enhanced product pages, enhanced collection pages that are driving improved conversion on the site. So a lot of good things happening there. And to your question about margins, the good news is that we're driving all these sales at full price. So we've really had essentially a full price posture throughout. And that's enabling us to drive really strong gross margins, but it also gives you room to invest more in digital marketing, which then further drives sales. So it's a nice flywheel there. And in terms of the overall sort of contribution margins, I think we disclosed on the last call that our company-operated e-com was in the high teens for 2020. And I think we're on pace to do even a little better than that this year.
Dana Telsey: Thank you. And then just on the retail footprint, any updates on your thought on the retail footprint number of stores openings or closings? And is that with outperforming the full line?
Ed Rosenfeld: Yes. So in terms of the overall number of bricks-and-mortar stores, I don't think you'll see it change too much. We're going to close few doors, might open a couple in international markets. So you may see the store count go down by a couple of stores this year, but basically no significant change in 2021. In terms of outlets versus full price, yes, outlet has been slightly better than full price in terms of comp trends.
Dana Telsey: Thank you.
Operator: You have a question from the line of Sam Poser with Williams Trading.
Sam Poser: I have a couple of things. Have you changed -- has anything happened in your wholesale business from a distribution, who you're selling? How much you're selling to folks outside of their own caution? Have you made any decisions or are you dealing with retailers that may have just shuttered or just decided to pull all the way back?
Ed Rosenfeld: No, I don't think there's anything to call out there.
Sam Poser: And then we've been talking about the accessories business. Can we talk about the apparel business within accessories and sort of what's going on with that? I mean, you had a little hiccup, but I see a lot of it on your web pages now. You're showing it and you're selling your own product into BB Dakota. Can you talk about what's happening there the margins of that business and sort of the longer-term outlook for that business?
Ed Rosenfeld: Yes. We feel really good about what we're seeing in the BB Dakota's Steve Madden business. I would say, in terms of products, it's really all about dresses right now. We're doing very well in the dress category that category has come back and I think we're really outperforming there and doing very well in the wholesale channel and on stevemadden.com. We've recently essentially ported over the BB Dakota website onto stevemadden.com. So that's why you're seeing a lot more of that product on our website and we're getting good reaction from the consumer. And we're just pretty -- we're excited about what we're seeing there. We're also learning a lot more about what the Steve Madden customer really responds to. And which parts of the BB Dakota line we should emphasize and lean into going forward. So I'm very optimistic about this business.
Sam Poser: Thanks. And then lastly, in regard to the direct to -- your own direct-to-consumer business, I mean so you're saying that you think that business can grow, just confirming you think that can grow double-digits versus 2019 in Q2? Is that correct? I believe you said that to a previous question.
Ed Rosenfeld: Yes.
Sam Poser: And then -- and the trends are showing that thus far in the quarter I gather as well?
Ed Rosenfeld: Yes.
Sam Poser: And then to the marketing -- to your digital marketing and all of that, if you look at the evolution of that marketing and where it can go, to what degree versus sort of more traditional marketing do you get sort of the instant gratification, the instant response and see how it works? And how is that moving along? And where are you with the CRM or on your CRM however you want to approach that?
Ed Rosenfeld: Yes. So in terms of digital market, I think that's one of the things we love about it is it's how measurable it is and how quickly we can and see what's working and we can of course, correct if something is not working or lean into something that is working. And so now with digital making up the majority of our marketing spend, we're really -- that's something we're managing on a daily or hourly basis. In terms of CRM activities, it's -- I think that's sort of a work in progress for us. One thing that we're not doing right now which we are -- which we need to do is really tracking customers across our various channels. So we obviously know a lot about what our customers are doing? What our e-commerce customers are doing? But we need to really have a better unified database, so we can see them what they're doing in stores and online and utilize that information to drive repeat purchases.
Sam Poser: Thanks, Ed. Appreciate it. Continue success.
Ed Rosenfeld: Thank you.
Operator: There are no additional questions in queue at this time.
Ed Rosenfeld: Okay. Great. Well, thanks everybody for joining us. Have a great day and we look forward to speaking with you on the next call.
Zine Mazouzi : Thank you.
Operator: Ladies and gentlemen, this does conclude today's conference call. You may now disconnect.
