Lands' End, Inc. (LE) Q3 2015 Earnings Report, Transcript and Summary

Good day, ladies and gentlemen, and welcome to the Lands’ End Third Quarter Fiscal 2015 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we’ll conduct a question-and-answer session and instructions will be given at that time. [Operator Instructions] As a reminder, this conference call is being recorded. I would like to introduce your host for today’s conference, Bernie McCracken, Chief Accounting Officer. Please go ahead.

Good morning, and thank you for attending the Land’s End earnings call for our third quarter 2015 results. On the call today you will hear from Federica Marchionni, our President and Chief Executive Officer; and Mike Rosera, our Chief Operating Officer and Chief Financial Officer. To begin our prepared remarks, Federica will discuss our third quarter results and progress today on key initiatives, and then Mike will provide additional details on our third quarter performance. After the company’s prepared remarks, we will conduct a question-and-answer session with our covering analysts. Please note that this morning we released our third quarter earnings results which are now available on landsend.com. I would like to remind you that today’s discussion will contain forward-looking statements related to future events and expectations. These statements are based on current expectations and the current economic environment or are based on potential opportunities. Actual results may differ materially from those expressed or implied in the forward-looking statements. Factors that could cause the company’s actual results to differ materially from those discussed are posted in the Investors Information section of landsend.com and in our most recent SEC filings. Our discussion will also include certain non-GAAP financial measures. Reconciliations to the most directly comparable GAAP financial measures also can be found in the Investor Information section of landsend.com. Any reference in our discussions today to EBITDA means adjusted EBITDA as defined in the earnings release. Lastly, we assume no obligation to update the information presented on this call except as required by law. I will now turn the call over to our Chief Executive Officer, Federica Marchionni.

Thank you, Bernie. Good morning, everyone. Our third quarter financial results did not meet our expectations, which we attribute to both external factors, including the challenging retail environment and warm weather, as well as internal dynamics. Importantly, we have made progress on a number of initiatives that we believe will position our company for the future many of which will take hold over time. Net revenues for the third quarter were $334 million, down 10%, due primarily to a decrease in the U.S. consumer business in addition to a decline in Retail segment sales. The decline of sales in the U.S. consumer business was the result of fewer promotions relative to last year. The planned reduction in catalog circulation and a lack of product acceptance in addition to pressure stemming from a difficult retail environment a $5 million negative FX impact and the impact of the warm weather on seasonal product. In an effort to drive more profitable sales and protect the brands, we made the decision to pull back on broad promotion during the quarter and to focus on product specific promotions, which drove a higher margin rate. However, even we were operating in a highly promotional retail environment, the sales impact from this decision was larger than we expected. And, therefore, we updated the structure of the promotional strategy in the second-half of the quarter to drive sales volume. That said, we were able to achieve a higher gross margin rate on a currency natural basis for that Direct segment. We will continue to evaluate and evolve promotions in order to strike the right balance between driving sales and maximize gross margin dollars. In addition, it is important to note that the sales impact from our planned catalog reductions during the quarter was partially offset, as we reinvested the savings into new brand marketing initiative, which drove additional sales during the quarter and planted the seed for our go-forward brand building strategy. The decline in retail sales during the quarter was the result of store closure, as well as an 8.9% decrease in same-store sales. The lower same-store sales were primarily attributable to a decrease in store traffic, which was partially offset by a 3.7% increase in average dollar sales, driven by an increase in unit per transaction. We believe that the challenging retail environment and the warm weather trends contributed to weaker traffic and soft sell-throughs in several key cold weather categories, such as outerwear, sweater, knits, and cold weather accessories. We stepped up promotions and took a steeper discount to drive sales, which in turn led to merchandised margin pressure in the quarter. In our international business, sales were up on a constant currency basis. However, reported sales were down due to negative impact of unfavorable foreign currency rates. We focused our catalog offering to be more relevant to local markets and invested space in key categories and top products, such as core knits, sweater, outerwear, and footwear, which we believe drove improved sales performance. In addition, we capitalized on our new brand content for our marketing and promotions. We also revised our pricing strategy in the UK and Germany, which led to an increase in margin rates in both countries. Further gross profit contracted a 11.4% to $162.4 million. Adjusted EBITDA was $26.5 million and net income came in at $10.7 million, or $0.33 per diluted share. This reflects a $0.04 negative impact from the change in foreign currency exchange rate and a $0.02 benefit from a recall reserve adjustment. In response to our sales performance, we were adjusting future inventory commitments and taking steps to move through current product. Our strategy will center around enhancing product and merchandising, elevating the marketing and branding, and driving sales in our Direct segment. We believe this strategy will lead to improved performance, as they gain momentum. We’re also investing to ensure we have the infrastructure and team in place to build upon our foundation to support these initiatives. Let me take a minute to discuss the progress we are making in each of these areas. First, product and merchandising. We launched a breathtaking outerwear campaign in October, where we drew inspiration from an epic journey to Alaska. Our outerwear offering feature products that range from a Squall Parka to Down Coat to Packable Jacket, as we look to cater to every need of our customers. The campaign highlighted feature and benefits with product storytelling to create a comprehensive outerwear shopping guide that sort by temperature, material, silhouette, and functionality. Our lineup of cold weather product also included timeless sweaters and knits and functional cold weather accessories, while the unseasonably warm weather throughout the quarter led to a softer than expected performance in this category, we expect to see sales pickup, as the weather become more seasonal and consumer have a need to buy quality cold weather products. Going forward, we continue to work hard to evolve into a go-to-brand for consumers seeking quality, value, style, and performance in product for all lifestyles and activities. Our focus is on increasing product relevance and reinvigorating the assortment with greater design appeal and innovation in our traditional styles. We are also developing an assortment to appeal to the younger customers that still embodies the Lands’ End DNA with products and messaging that reflect both casual and urban and sporty lifestyles. Second, we’re working to grow our brand awareness and strengthening our brand identity to engage consumers across our product portfolio. During the third quarter, we focused on capitalizing on the Lands’ End DNA by bringing stories of adventure coupled with images of our timeless yet innovative products to consumer via different number of channels. One great example is the outerwear campaign that drew inspiration from the Alaskan wilderness, showcasing our product performance and looking amazing in the beautiful and right landscape. We’re also excited about a recent engagement of Bruce Weber, a renowned fashion photographer who has helped us capture the essence of our brand for our new global multimedia holiday campaign. The extraordinary campaign we believe in you visually depicts the heartfelt moment and genuine connections of multigenerational families and friends. The campaign made its debut on landsend.com and was featured globally in print, online, and social media starting in early November in addition to being featured in key high traffic areas, such as Time Squares, on taxis in New York and Boston, as well as on United, American, and Virgin Airline flights nationwide. To bring the holiday campaign fully to life, we have created a 360 degree e-shoppable holiday gift guide on our website to elevate the online experience and opened two pop-up stores in New York and Boston in November, prominently situated on Fifth Avenue in New York and at Copley Place in Boston. The two pop-ups are modeled after the concept of a wintery ski chalet and are designed to be a fun-filled holiday shopping destination for the extended Lands’ End family. Customers are excited to be able to experience the brand and products firsthand. And as the New York Times stated the service is surprisingly adroit for a pop-up shop and the clothes are pure comfort food. These locations are being leveraged for testing new products and visual merchandising and are serving as a global window into the Lands’ End brand in this high traffic areas helping to raise brand awareness. We work to employ strong messaging around the features and benefits of our product to highlight our great quality of value, style, and performance. You should expect to see Lands’ End continued to be active in both traditional and social media channels, as we lean on our reach heritage and core values that speaks to consumer across a wide range of age and demographics. Third, we’re focused on the Direct segment. In our catalog business, we see a significant opportunity to improve productivity. We would use our catalog circulation and shift investment away from lapsed and less profitable customers to marketing initiative designed to capture new customers. While this resulted in a reduction in sales, we achieved meaningful cost savings that are being reinvested in marketing initiatives designed to drive new customer acquisition and increase brand awareness over time. In the third quarter, we revamped our catalog dedicated to our loyal customer with improved product showcased by enhanced photography featuring authentic, multigenerational family teams images, as well as updated messaging and better consumer engagements. We also launched a more modern team catalog during the quarter targeting on younger demographic with fresh and editorial through even photography. We were pleased to receive a plethora of compliments from our consumer on the elevated aesthetic of both campaigns and we saw a positive response to our full preview catalog in September. That said, subsequent catalogs did not perform to our expectation, as the weather trends continued to hinder sales on seasonal products and we did not have the desire level of newness in our offering. Our Spring 2016 catalog featuring our new go-forward product vision are designed to drive improved sales performance. We launched our enhanced shoppable digital catalog experience during the third quarter. Although, this is still in the early stages, we are encouraged by the early response to our enhanced digital experience, as we continue to improve the way that consumer interact with Lands’ End brand online. We think that this digital catalog is a great compliment to our new distinct physical catalog distribution strategy, allowing us to target mailing based on how its consumers prefer to shop with us. We will continue to reinforce our print and digital catalog strategy to heighten brand awareness and aspiration, make our product offering more vivid and compelling, and ensure our brand messaging is more clear and aspirational. We continue to make our e-commerce business a primary focus. If you recall from our Q2 earnings announcement, we reiterate our commitment to providing our loyal and new customers and more compelling and simplified online shopping experience. Given the customer acceptance of our new online feature in May, as well as our efforts to drive new customer acquisition, we enhanced entire website in August to feature an improved merchandising assortment, a reconfigured side index, and a streamlined check out. Overall, we are encouraged by the positive customer feedback we’re receiving to the upgrades we have made to our e-commerce business. We continue to rollout enhancement of this channel to ensure the best customer experience possible on landsend.com. We also saw a 42% increase in mobile traffic in the third quarter relative to the same period last year, largely due to a shift in consumer behavior and preference of mobile to desktop devices, as well as improvements that we have made to the mobile shopping design and functionality. In our international business, we plan to build upon our momentum by launching brand advertising campaign in key publication across Europe and Japan in Q4, in order to raise brand awareness and acceptance on our international scale. We also continue to move forward with an upgrade of our international web platform, which is due to launch in 2016. Finally, hopefully you saw our announcements yesterday that we have launched the new Lighthouse by Lands’ End label at Sears. This is a great new concept that we believe will enhance the customer experience within the current Lands’ End Shop at Sears. We just converted the first store in Willow Grove Park Mall in Pennsylvania and we’ll convert the concept in additional eight Sears locations starting in February. The Lighthouse names drove upon our heritage and symbolize a beacon that guides our way for the future, while delivering the same classic casual merchandise with excellent quality and unparalleled value that loyal Lands’ End customer knows and love. Indeed, the company used to collaborate with the U.S. Lighthouse society to upgrade awareness and preserve Americans historic lighthouses. Our latest collaboration was announced in October when we started to take step in partnership with a National Park Service and the U.S. Coast Guard to save the Alcatraz Island Lighthouse, the oldest in the West Coast of the USA. We strongly encourage you to visit both our pop-up stores in New York and Boston and our Lighthouse by Lands’ End store in Willow Grove, Pennsylvania for an upgraded firsthand brand experience. In summary, as we look toward the holiday season, we have a number of exciting initiatives in place, including marketing campaigns, redesigned catalogs, and enhanced website, as well as our lighthouse by Lands’ End project. That said, as we have heard many retailers fade over recent weeks that retail environment particularly the apparel business remains quite challenging. While we are succeeding in pushing forward in a number of key strategic initiative amidst the softer than expected results, we believe that many of these investments will take time to bear fruit. We remain committed to our brand strategy, which is grounded in bringing the quality, value, and service that Lands’ End is known for to a broader customer base that has a passion for living a life, doing what matters most to them. We will continue to make progress and be adaptable and nimble throughout each phase of development to implement our learning, push our innovation, and build the brand for the long-term. I will now turn the call to Mike.

Thank you, Federica. I will review the revenue and gross margin results for each of our segments and review additional operating items, as well as certain balance sheet and cash flow components on a consolidated level. Total revenue was $334 million, which was a decrease of $39 million, or 10% to last year. This was comprised of a decrease in the Direct segment of $33 million, or 10% to $288 million and a decrease in the Retail segment of $6 million, or 12% to $47 million. The decrease in Direct segment revenue was primarily due to the decline in sales in the U.S. region. The U.S. business realized negative comparable sales in almost all product categories. And as Federica outlined earlier, the decrease is attributable to a combination of internal and external factors. Internal dynamics affecting the decline in U.S. revenue included fewer promotions relative to last year, planned reduction in the lowest performing sector of our catalog circulation, and continued low product acceptance of our merchandise offerings. The sales decline was partially offset by revenue driven by our new brand marketing initiatives. Externally, we continue to experience a challenging and highly promotional apparel retail environment, as well as the unseasonably warm temperatures, which impacted our cold weather merchandise sales. International revenue in the Direct segment was impacted by foreign exchange headwinds, which negatively impacted reported revenue by approximately $5 million mostly in Europe. On a constant currency basis, international revenue in the Direct segment increased slightly. Revenue in the Retail segment decreased $6 million, or 12% attributable to a same-store sales decrease of 8.9% and operating 15 fewer locations at the end of the quarter, compared to the same period last year. The same-store sales decrease was primarily attributable to many of the same factors, which impacted our Direct segment in addition to declining traffic at our Shops at Sears. We operated 227 shops at Sears at the end of the quarter, compared to 242 at the end of the third quarter last year. Gross profit of $162 million decreased $21 million, or a 11% compared to the third quarter of last year. Gross margin for the quarter decreased 50 basis points to 48.6%. Excluding the impact of foreign currency exchange rates, gross margin was flat year-over-year. The Direct segment gross profit decreased a 11% and gross margin in the Direct segment decreased by 50 basis points to 49.3%. Adjusted for the impact of changes in currency exchange rates, gross margin in the Direct segment increased 20 basis points. Gross margin in the Retail segment decreased 110 basis points to 44.0%. The decrease in the Retail segment was attributable to increased promotional activity during the quarter. Total selling and administrative or S&A expenses for the quarter decreased by $7.5 million, or 5% to $136 million. Total S&A expenses as a percentage of revenue increased by 220 basis points to 40.6%. The S&A expense deleverage was primarily due to the decreased sales volume, partially offset by lower costs. Of the $7.5 million in S&A expense reduction, $2.4 million was due to changes in currency exchange rates during the quarter. The currency neutral cost savings included a decrease of $3.3 million resulting from lower marketing investment and a decrease in incentive compensation expenses of $2 million. Other operating income includes $1 million of income related to the product recall reserve recorded in the fourth quarter of fiscal 2014. The $1 million represents a reversal of the product recall reserve and the vendor payment received in relation to the recall. The customer return rates for the recalled products have been lower than estimated despite the efforts by the company to contact impacted customers. The remaining reserve is immaterial. Operating income decreased $12 million, or 34%, primarily due to lower revenue volume offset by S&A expense savings. Other expense during the quarter was $800,000 compared to other income of $500,000 in the third quarter last year. $1.2 million of the increase in cost was attributable to the write-off of a receivable from our former parent company. This receivable is no longer collectible due to the resolution of certain tax matters for which we were indemnified by our former parent company as a result of the spinoff. Consequently, there is a $1.2 million reduction in income tax expense before the impact of federal income tax. Net income decreased $7.3 million, or 40% to $10.7 million, and diluted earnings per share were $0.33 compared to $0.56 last year. The negative impact of foreign currency exchange rates on earnings per share was $0.04. The recall reserve adjustment benefited net income by $600,000 and earnings per share by $0.02. In addition to the GAAP measures outlined above, adjusted EBITDA is an important profitability measure used to manage business. Adjusted EBITDA for the quarter decreased $13.4 million, or 34% to $26.5 million, representing 7.9% of revenue. The negative impact of foreign currency exchange rates to adjusted EBITDA was $2.3 million. Also note that adjusted EBITDA excludes the impact of the recall adjustment. Now, let’s turn to the balance sheet. Total cash and cash equivalents for the quarter were essentially flat at $105 million compared with $106 million at this time last year. Inventory for the quarter increased to $437 million compared to $404 million due to lower revenues and increased receipts during the quarter. We are taking steps to move through current product and adjusting future inventory commitments as necessary. Long-term debt decreased to $502 million as compared to $507 million at October 31, 2014, due to quarterly principal payments. Operating cash flow used year-to-date was $95 million compared with operating cash flow generated of $86 million during the same period last year. The decrease in operating cash during the first nine months of the year was a result of an increase in inventory receipts this year compared to last year, the lower operating earnings due to 10% reduction in revenues year-on-year and the one-time impact on the prior year cash flow of the separation with our former parent. Receipts are higher this year as beginning inventory for fiscal 2015 was $69 million lower than beginning inventory for fiscal 2014. For 2015, we plan to invest a total of approximately $25 million to $30 million in capital expenditures, primarily for strategic initiatives and infrastructure. And now, we will open the call for questions. Operator?

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

Great. Thanks for taking my question. I appreciate the comments and about the competitive environment. Certainly, we’re hearing that from a lot of other retailers that the holiday season so far has been very promotional. Can you give us a little bit more quantitatively about what we should really be expecting for the fourth quarter? I mean, would you expect revenue trends more or less consistent with what we saw in the third quarter? What would it take for you to get, reinvest a little bit more in the marketing, or are you kind of pulling back on that a little bit for the next few quarters?

Yes, thanks, Alex. I think the first, as you know, we don’t give any forward guidance. But with that, I would like to comment that we do have a number of initiatives that Federica did outline on what we will be doing to drive business in the fourth quarter. And those include the marketing initiatives we just talked about both the brand marketing and the changes to the catalogs, as we speak to our customer and how we’re speaking to them the Bruce Weber campaign. And those will be how we look at focusing on the fourth quarter, as well as being in touch and in tune with the consumer as we look at the promotions that we need to drive our business.

All right. That’s helpful, thanks. And then can you just share how the uniforms business performed in the third quarter and your outlook for that segment in the fourth quarter, I think, that would be helpful to try to dissect how the rest of your core direct-to-consumer business performed in the third quarter?

Yes. When we broke out the – we look at the uniform business as a category of U.S. business and we said the U.S. business was down, that was mainly driven by the consumer business. So our uniform category did perform better slightly positive, but it’s not a number that we do break out. But as we said the biggest decrease that we did see was from the U.S. consumer market.

That’s helpful. Thank you. And then, just thinking more broadly limited history here and only the couple stores. But the pop-ups that have been done so far, I’m curious to what the response has been there from a branding perspective in those markets and maybe thinking a few more years out, I mean, has there – have there been learnings there that would suggest that perhaps a more conventional retail store rollout might make more sense for the brand at some point?

Good morning. This is Federica. Well, the pop-up store really give us an incredible experience to learn what is good at Lands’ End already? What do we have? How do we – how we can move and how fast we can move? That, first of all, our team made an incredible work in making happen those two pop-up stores. We choose those two locations based on different criterias. And the learnings are definitely in line of what in a way we were expecting, of course, people would like to have firsthand experience. But as you also saw from data that are public, [ph] people tend, especially in U.S. to shop more online. So the online will definitely still be our first focus nationally and internationally. But the pop-up store can be one of the way that we can increase, first of all, the brand awareness. And as we look at the distribution this is definitely one of the area where we can grow on the retail.

Great. Thank you very much.

Thank you.

Thank you. Our next question comes from Steve Marotta of C.L.K Associates. Your line is open.

Good morning, everybody. Just a quick question on the inventory being up 8% you mentioned that there’s going to be steps taken in order to reduce the inventory levels. Can you talk a little bit about those? Do you anticipate increasing promotions as the fourth quarter progresses in order to enter the New Year in a clean inventory position?

Yes, good morning, Steve. Yes, I would say, as we’ve talked about in the script one of the big drivers for our decrease was the promotions that we didn’t run this year as compared to last year. And this holiday season will be important that we keep our eye on the promotions that are needed for our customers. And so we will be reactive to the marketplace and aware of the learnings we have from Q3.

Okay. I know you don’t give any sort of forward projections. Can you talk a little bit about how you would like to end the year, however, from an inventory standpoint?

Yes, as we look at this right now, we’re about roughly $30 million over where we were as we break that down into the receipts, I think, it’s important first to note that this is – well, this is slightly above last year, it is the second lowest inventory we’ve had at this point in time in the last five years. So we are – we’ve been doing a lot of work with our inventory. We will continue to do that. We are always looking at our forward commitments to see what we can adjust. We are in a much better spot in our aged inventory than we’ve been in four years age being defined as inventory we’ve held over one year. About 85% of our business is what we would classify as basics or seasonal basics, which means that, it’s not a big fashion risk with the assortment that we would be carrying. So we – like we previously answered was, we’ll be looking to move in the fourth quarter as necessary in the promotional environment that we would be – what we’re seeing out there. But that, I think, we – we’re going to continue to work on it and continue to adjust any forward commitments that we would see necessary. And then just one more point, I think, when we look at the receipts that we did bring in this year, we started the year at $69 million last – than last year. And we brought in just slightly more than $60 million of receipt. So, as we look at the mess, it is mainly due to the sales revenue that we did not generate versus last year, and we’ll continue to focus on that.

I can also add, Steven, good morning.

Yes, Federica, hello.

Hello. I can also add that my focus is very much on building a very qualitative inventory for next year. So everything that we need to buy and everything that will be an additional thing for what we already have on the sizing on the colors, I think that we can do a much better work in what I will – what I call always to streamline the merchandising offer. So we need to definitely offer new product the way we structure the inventory will be a key to the success. And so that is a very big focus for me and the inventory team at the moment.

Okay. So if I read that correctly then if inventory is increasing, say, at the end of the fourth quarter and into the first quarter that because of investments – product investments that are being made for the first and second quarter?

Yes, I don’t – our commitments are done through first quarter. So we’ve worked into a fair amount of what Federica would say as the assortment changes she is making, and that’s all built in factored into what sales we expect to generate. So the change in inventory wouldn’t drive any larger investment. It’s just we want to make sure that we bring in the right inventory for the right amount of inventory for the sales we expect to generate.

Okay. And, Mike, I’ve got a one more question for you and then one more question for Federica. The 85% in basics or seasonal basics, do you – I’m reading that to believe that you would pack away, say, seasonal merchandise that doesn’t sell this year, because maybe of cold – the lack of cold weather, or for whatever reason, and that can be packed away for next year. Is that accurate?

Yes, we do every year an analysis as any retailer would do that. You look at the – anybody that’s a direct/retail in four walls, it’s more difficult. But in the direct/retail, you would look at the benefits of moving that inventory now versus keeping it to sell again at a full price in non-markdown situation next year. So each – it’s a factor of what the product is? What we think the relevance is the acceptance that we did see this year and our actual size runs and that sort of stuff. So it’s a – it’s almost a product – by product assessment, but that is certainly an option.

Okay, great. And, Federica, I got one more question for you. As it pertains to the marketing initiatives to-date in digital and social media, I’m assuming that you can better track your customer acquisition costs. And can you talk a little bit about how the – how your ability to acquire new customers to the brand, I know, it’s been a relatively difficult environment, I know, it’s also something that’s influx, it’s, everything is changing. But can you talk about the initial successes of the digital marketing program to-date?

As I was saying everything that we’re doing is that is new initiative, it’s too soon to say and especially for this retail environment do not give justice of everything that we did. But I can give you few examples on the good success stories that we experienced. But let me start with a catalog first even if it’s not a digital thing. First of all, we also introduced the digital catalog, which drove an higher conversion rate versus the other catalog, again, this is a very limited experience about the positive response, it’s already a good starting point on the catalog. When we launched the first one, the market was not as bad as we started in September. And in August, we dropped the new revamped catalog. We had made a significant calculation, but we had a productivity increase by 75%. I think those are the things that we need to see. And, of course, after when the market started to be very difficult and then the weather didn’t help, we had experienced a different situation. This is also one of the reason why we increased the promotions. The – on the digital side, we are an e-commerce company, but the focus on the digital and social media as I just mentioned weren’t that strong. We have a very strong Facebook following, but especially for the new customer acquisition we need to be stronger in other platform. And I mentioned Instagram aware, since I started, we completely doubled the Instagram base. It’s still relatively low number, but before the quarter, for example, we increased 36%. So everything that we’re doing on, it really give us a good hope that we are in the right direction. On the digital catalog, of course, there is so much we can still do. But the fact that today you can click on the catalog and you can shop immediately, make a better experience for the customer, and we will improve even more the circulation of this catalog the way we expose our catalogs there. We can do much more even on the media side to distribute this digital catalog. That doesn’t mean that we want to completely walk away from the current catalog that we have today, because that remains our biggest focus on the direct marketing that we want to make it in a very efficient way. So, as I was saying the September situation that didn’t happen, but when we dropped that catalog, that is the story that I would like to tell a 75% increase in productivity with a much lower reduction in circulation, meaning investments.

That’s very helpful. Thank you and best of luck.

All right. Thank you.

Thank you.

Thank you. I’m not showing any further questions in queue at this time. That concludes the Q&A session for today. Ladies and gentlemen, thank you for participating in today’s conference. That concludes today’s program. You may all disconnect. Everyone have a wonderful day.