iMedia Brands Inc (IMBI) 2003 Q3 法說會逐字稿

Welcome to ValueVision Media's third quarter earnings conference call. (OPERATOR INSTRUCTIONS). Today's call is also being recorded; if you have any objections, please disconnect at this time. Before we begin, Anthony Giombetti, Director of Corporate Communications, will read a brief statement.

Today's conference call may contain certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Listeners are cautioned that such forward-looking statements may involve risks and uncertainties that could significantly affect actual results from those expressed in any such forward-looking statements. More detailed information about these risks and uncertainties is contained in ValueVision Media's filings with the SEC.

I would now like to turn the call over to Mr. Gene McCaffery, Chairman and CEO. Sir, you may begin.

Good morning. We are being joined by Dick Barnes, our Chief Operating Officer, Chief financial Officer; Nathan Fagre is on the call, who is our chief legal counsel; and because of the amount of information that we have provided on our press release having to do with merchandise mix and airtime, we are also being joined by Liz Haesler, who is our Executive Vice President in charge of all merchandising, television and the Internet. If there are some questions specifically about the merchandising and airtime allocations, I will direct those to Liz Haesler.

Let me start off by saying that we did do a little bit of a different release this time. We do think and I believe that this past quarter was probably one of the more pivotal quarters in the last couple of years because we actually addressed some of the issues that I have been talking about and that many of you have been talking about for the last 12, 18, 24 months, and that is the necessity for ValueVision ShopNBC to start to change the way our merchandise mix and our pricing structures have been operating on for the last two, three, four years, as we've developed all these new homes.

Liz Haesler, who many of you probably have not met -- Liz Haesler has been here about a year. Her challenge charged when she joined the Company was to build a merchandising team that started to address categories other than the jewelry categories and the computer categories; at the same time, attempt through the transition for us not to take significant financial hits while we start to move through this transition now. We've developed the business that we have over the last five years, and we did say on a conference call some quarters ago that we were going to commit a couple million dollars in G&A expense to develop these teams. And that our test in the past to downplay some of the jewelry as to increase the diversification of merchandise categories were done without a great deal of thought, without a good planning team and without a merchandising team that worked on this for sometime before we put it on the air.

It was our intention to make the moves into the diversification in fourth quarter, but Liz has developed some pretty strong merchandising organizations here over the past 12 months. And we decided to start some of this diversification in the second quarter and actually made some major moves in third quarter, and obviously, we are now into the fourth quarter. And going forward, I think you'll see a lot of the trends that we discussed in the release, a lot of those trends to continue.

If you will look at our general performance, some of the highlights that are in the press release, I would say that I think we are probably in some of the best shape that we have been in in a long time. If you look at our inventories, our inventories are higher than last year but our business is significantly higher, as well. For example, in November alone we are tracking to do somewhere between 9 and $10 million more business than the previous year. And that's our trends through the 20th of the month. We did mention in the press release that our sales for November through yesterday, actually, are running up 20 percent. Which is fairly substantial, because November last year was one of our best months in the quarter, with very high double digit sales increases. And November was going to be one of the months that we were most concerned about going into fourth quarter. And actually, December last year -- I believe the number is correct; Dick can correct me when I am finished -- but I think that last year in December we ran an 8 percent sales increase over the previous year. And again, being redundant, we're running up about 20 percent so far.

If you look at the bullets as we discuss them, merchandise other than jewelry and personal computers accounted for almost 20 percent of our business this past quarter, and there was a dramatic difference in the way we ran our business from the standpoint of personal computers versus cosmetic apparel and home accessories. One of those bullets also talks to the issue that we actually took our computer airtime down by upwards of 20 percent, and that our sales in personal computers dropped about 7 percent. If you were to take a look at -- if we did the same thing as we did last year, those computer sales would have accounted -- we actually dropped about $3 million in computer sales for the quarter. So had we kind of thrown those hours back in we probably could have ran a better topline, but the amount of computer sales we had last year also affected our margins considerably.

If you looked at the comments about our average price points dropping about 7 percent, what is very important about this is that -- number one, it allows our return rates to considerably decline over time, and we actually did have almost a 2 percent difference in our return rates for the quarter. And probably one of the most important issues that is on the release is the fact that our unit sales for the quarter were up 20 percent. All that kind of ties in with the fact that our price points are coming down, and we've increased our exposure in the apparel cosmetic home and home accessories area by as much as you see there, 50 percent in the release. When you start to take all these numbers and move them around, the most important thing I think is that as you look at apparel -- and Liz can talk to this more based on your questions -- but if you look at our apparel business, our apparel business has return rates well under 20 percent. The cosmetic area has return rates probably in the 11, 12 and 13 percent. And as we start to increase these categories, obviously, our net sales number off our gross sales number will continue to improve.

So as we look towards where we are at the moment, I would say that our inventory is about as current as it has ever been, our sales trends are pretty strong, and the improvement and the strategy execution -- while obviously not flawless -- bodes well, I think, for the future. And I think that Liz would probably also say that it's kind of a challenge to be able to mix the new categories into the programming here in third quarter and as we have done in fourth quarter. The jewelry productivity where we said that we've got our jewelry airtime hours by 5 percent, and our jewelry sales increased almost 10 percent -- that productivity is also a challenge for us to continue to improve our jewelry productivity in those less hours as we continue going forward. So I would say that from a performance standpoint, the quarter was one of the best quarters we've had in quite some time. And I think from a -- finally delivering on the discussions we've had and the discussions you've had and some of the research reports that are out about our need to be able to diversify, I think you have seen in this quarter that we have started to make a move in that way. And fourth quarter will reflect this to an even greater extent. And as we move forward, it should affect everything that we do very positively.

The main question that I have been getting in the last two days is where are we on a CEO search? It's kind of like the cable question, we announce it once we start it, but I will call you that we would expect -- I expect that we will be able to announce and have a new CEO in the next few weeks. The announcement possibly may come sooner, but I expect that there will be a full CEO transition by the end of the year, end of the year being only four or five weeks away. So that is on track, and again, I don't think we can answer any further questions on that other than the timing over the next week or so for announcements, and the next few weeks for the transition. Those decisions are imminent. Obviously, there is always the issue of signing it, but I am pretty confident that that's going to happen here in the next few weeks.

So with that, if Dick, Nathan or Liz have anything to add?

The only thing I would do it is confirm what you said a second ago, December was up around 8 percent a year ago. So as we look at our fourth quarter, November is the toughest month we are lapping, and as you've said, we feel pretty good about that. December from a comp standpoint is nowhere near the sort of hill to climb, so to speak. So I think it is important to reiterate -- and I'm speaking more from a financial standpoint -- we feel pretty good about this quarter here we're in (indiscernible) we're wrapped, based on the first 3 weeks of the holiday season here.

With that, why don't we open it up to your questions? Thank you.

(OPERATOR INSTRUCTIONS). Bob Evans, Craig Hallum Capital.

Can you comment, either Gene or Liz, in terms of where you expect the -- where do you expect the mix to go, the price points to go? What would be a reasonable target for you, and what do you think the time frame would be? I know you don't know that for sure, but in your mind, where do you expect this to go?

I think that if you look at the mix with less jewelry hours, jewelry actually, as a percent to the total of, stayed in that 62, 63 percent range. And Liz has dramatically changed the exposure of apparel cosmetics. And I will say to you that the apparel cosmetics, home accessories, the increase in productivity that we get (technical difficulty) jewelry, and the increase in productivity that we've gotten in computers by cutting back the hours, you don't get the same, if you will, increase in productivity by giving categories more hours. And also, we are bringing merchandise in on the air that we have really not exposed to the customer before, and we certainly do have a reputation for being a fine jewelry shop. So that's a long way of saying that I think Liz is probably going to go as fast as she can, based on the way we find the merchandise assortments, vendors and the acceptance we get from the customer. Because I think to set up a rule to say that this year we want to get to a particular place, I think it denies some flexibility, and I think we would be better off speaking to it each quarter. Because I know she has a very aggressive plan to improve the non jewelry area. And of course, one of the other areas that Liz is working on is the whole area of continuity or off-air sales, which is inclusive of upsells, as well as continuity for products already sold. So I guess, again, that's a long way of hesitating to put hard numbers into the equation, other than to say that I think we are prepared to move very dramatically by quarter, to the degree that the customer accepts what we put on the air. Liz has developed a merchandising staff in apparel, in home and particularly in cosmetics. These folks are fighting for airtime everyday. And I think Liz is probably apt to give it to them as soon as we are ready. Liz, do you have anything else to add there?

No. Gene is right on. Our airtime will increase by 64 percent for that area. From an ASP standpoint, we have a holiday gift giving --

The ASP, Liz?

Average selling price. We will see continued progress fourth quarter similar to Q3. But the big change for us is a gift giving strategy. The merchants have gone out and specifically bought product at a lower price, even within jewelry. And our average selling price will decrease by 50 percent in this gift giving strategy. So assuming that it works, we will be at $129, which is almost half of where we typically are in jewelry, for this gift giving strategy.

Gene, I'm just going to add a comment because I have been asked. I should say this in a public forum, too, that our Q4 mix -- the question I have been asked, what's Q4 going to look like relative to Q3? And from the standpoint of sales split, it will probably look a lot like Q3 in terms of how it will split by category -- perhaps a little bit less on PCs and a little bit more on the new categories. And the important point, as Liz said, is you'll see further declines in our average selling price.

Are you going to shift the hours or the programming hours much from Q3 to Q4 in terms of how you allocate them by category?

Similar to what we did for Q3. So we had a significant increase in airtime in non jewelry, typically cosmetics, ready to wear and home. And that will continue for Q4.

Is this a situation where you have to some degree take your lumps, as you are trying to move the viewer to a different category? And is that the reason why you have lowered your EBITDA guidance for Q4?

(indiscernible). It's kind of -- it's something we have to do, and whether we take lumps or not -- there is certainly a possibility that we just can't put stuff on the air, find out that it doesn't produce as well as we like, and find ourselves taking it off the air and just putting jewelry back on. Because that would assure that you don't take any lumps, but that would also assure that you don't make any progress. So as you look at the EBITDA and the sales numbers, you say wow -- you've got almost November 2/3 done and you're up 20 percent. How come you have got ranges form 7 to 17, and you've got EBITDA of 7 to 10. Look, we looked at third quarter and we consciously elected not to take the top line computer sales. They were not profitable. I think that we can -- the art here is to generally manage our way through this. Actually, I tell you, I have probably been one of the people that has kind of been in the way of this, because we have never really had staffing until Liz came aboard, where she has developed the staffing to do this. And I am very encouraged that with the shift change that we have so far, that going up against one of our biggest months of the year that we can run decent margins and 20 percent sales increases. So I don't know, I guess I don't want to address taking our lumps. I guess if there is a strategy change with a new CEO, or everybody decides that maybe they want to do this faster and maybe there are some lumps -- I think that is something you will discuss with the new management in the next couple of weeks, or probably after the next month or so, after they get their feet on the ground. But I guess I am not prepared to say we are going to take our lumps; we are going to work our way through it as best we can.

That's fair. Can you just comment on margins, where you expect them to go in Q4 given the mix change?

The mix change actually isn't driving lower margins. Our margins are on plan in non jewelry. Jewelry margins have been very very difficult. Computers are well ahead of plan and (indiscernible), and we are determined, driven and committed to delivering margin plan in jewelry for Q4. We have aggressive strategies in place to be able to deliver that. But understand that the mix change is not where the shortfall in margin is coming from, it's really coming from jewelry.

Overall, I would expect our Q4 margin will be up from Q3. Q3 was kind of an anomaly, but I would expect that we will start to return to (inaudible) levels (indiscernible) in Q3.

Can you explain that jewelry margin anomaly? I'm sorry if I missed that.

That's okay. (indiscernible) are our largest business. We've suffered some deterioration in margin just due to some aggressive promotional strategies that we put in place. We are working with the vendor community for their support to get us on plan for Q4. And I have personally taken part of all of these meetings, and we will aggressively continue to pursue getting their support to get us back on plan for Q4.

David Brenner, Bleichroeder.

Two quick questions. I'm wondering if you could talk about the Internet business for a minute, what you are seeing there? Also with respect to sales mix and margins, and whether you are finding that that is useful as a testing ground for any of your products before they go on the television part of the business? And then secondly, with respect to NBC, I am wondering if there is any contemplation that perhaps some of the Vivendi properties will end up having products sold through ShopNBC or on the Internet side, also?

Liz has had some preliminary meetings with NBC to determine maybe what the opportunities are with the integration of all the different Vivendi properties, studios, cable, etc. I would say it would be too preliminary for me to give you a firmer answer in that it's just happened. But Liz has met with the NBC folks that are looking at all and working on that integration. With regard to the Internet, this quarter -- third quarter last year, aside from it having just incredibly poor margins -- for those of you that may not have lived through it like we did, we actually had terrific top line sales last year at third quarter, but we did them by doing incredible amounts of promotion, and not necessarily all of the promotion to the public. We had created so many difficulties in our operating systems and affecting our current customer base, that we did an enormous amount of e-mail marketing and direct marketing, providing significant discounts to our customer base, because they had been treated somewhat shabbily as a result of us not being able to communicate properly with them during the implementation of our operating systems with Oracle. If I remember correctly, Dick, I don't have it in front of me. But I apologize, I am on a speakerphone. But if I remember correctly, we ran up about 20 percent topline. So we drove some big sales by doing some big discounting, and a lot of that came from the Internet.

Actually Gene, we were up last year third quarter 24 percent year-over-year in topline (inaudible) --

We drove topline up 24 percent in the third quarter, and obviously, lost $8.5 million. So this year what we decided to do was obviously pick up five or six points of margin, not drive those same promotions. So what we had was is we had a smaller increase in our Internet sales, because the Internet was running -- not only was it running all-free shipping, but it was also running 10 percent off. And then 10 percent off and 15 percent off already marked down clearance prices, we elected not to do that again. So while we could take a look at the 150 million and say well, it's not 154, third quarter was probably one of the best operating quarters that we've had in a long time. And the Internet -- I don't think that we actually use the Internet to test new products, although I made a note when you asked the question. But what we find is that the Internet is best used when we cross-market between the Internet and television. Because what you find on television is you can only show one product at a time. And what we do it on the Internet is say look, if you like this watch, go to ShopNBC.com; got to watches, and we've got literally hundreds of watches or thousands of watches for you to choose from. And that's where we get our biggest bang for our buck, from Internet marketing. So we run somewhere just south of 20 percent, sometimes in the 16, 17, 18 percent of our sales on the Internet. And our Internet business has gone from 2 million 5 years ago to probably 125, $140 million. But it's really in conjunction with the marketing on TV, as opposed to it being a test for new products on television. Although I think we could broaden our assortment on the Internet by bringing in more vendors than we have even necessarily on television, and cross-market between the Internet and TV, and probably get a big bang for the buck. But I would say that this quarter, third quarter was really a terrific operating quarter, and it certainly looks like it's laying the groundwork as we move into fourth quarter. So we are very optimistic.

Peter Siris, Guerilla Capital Management.

I don't know quite how to ask this question. If I look back at the history of shopping on television, going back to the earliest days of HSN and QVC, your early days, the toughest -- the area that people have always screwed up or had a tough time was changing the product and changing the customer focus. And it's something everybody always wanted to do, but sometimes when they did it, it got them in trouble. And I applaud you guys for doing it, I think you are doing the right move. The question I am asking is sort of looking back at the history of where everybody else screwed up, what are the things that you are going to look for as you are going through this process that's going to tell you you are on the right track and the wrong track, and how much are you willing to let short-term business suffer to get your self long-term to where you want to be?

That's a good great question. It's kind of the question we wrestle with amongst ourselves all the time. It's why we've been, maybe, such a long-term company. If you look back at QVC and HSN, they both started out the same way in the jewelry business, frankly. And you're talking about two companies that now have jewelry down to about 35 percent of their mix after 20 years. If you look at our company, when I joined the company in 1998 our television sales were less than $100 million in total. And we weren't in more than 11 million homes. So rather than to say that this Company is from 1991 to 2003, the Company is basically five or six years old --

I'm sorry, I was talking about the times -- not you guys -- I was talking about the times when QVC and HSN tried to change their product. I wasn't singling you guys out in that.

Well I think that but, yes, you're right. What we are trying to do -- my position has always been that we do not make an arbitrary decision to change the mix by certain percentages in quarterly or yearly increments. Because I think that the reason you get in trouble is if you make that decision, and you bring in new product categories and the new product categories don't work, but your assumption is that eventually they are going to be accepted -- well, if you bring in the product categories and the merchandise mix and they are not accepted, you have just basically hurt your jewelry business, and you haven't grown by virtue of the reallocation. So while I think that there is some justifiable criticism of us being too slow to change, or maybe an impatience for us to change, my view was that all the things that I tried to change before Liz Haesler joined never worked. And we didn't invest -- I think on the G&A side -- Dick, I don't know -- 2 to $3 million we have spent this year alone in investing in the merchandising organizations. And we are not going to rely on the new merchandising organizations, the non jewelry merchandising organization, to just put it on the air and let's all hope we do well, and let's all grin and bear the pain. My sense is is to do it just the way Liz did it last quarter. You bring it on, and we are spending as much in shoring up the jewelry business as we are in going after cosmetics, apparel and home, because the challenge on the jewelry business now is also great. Because we don't need to give up any jewelry business. We need to do similar amounts of jewelry business, if not larger amounts of jewelry business, based on our sales for home, than we do today in less hours. So I think that we have comprehensively kind of taken your question and argued about it for the last 12, 18 months. And I think we're feeling a lot more confident that we are not going to answer the question that was asked earlier -- what do you expect to change when? Well, we are going to be very aggressive but we are going to respond to the results, as well.

I appreciate your answer and I think it's the most interesting question about this business, because you have people turning on the TV to see a particular product. And if you start to introduce new products, that -- it takes awhile for those people, new people to start tuning in. So changing the product mix is really a tough thing, and I appreciate the way you guys have approached this.

Let me also say something, I don't think I have ever said this in public, but there is another side to that. And the fact that we are a $250 average transaction company versus QVC and HSN, which are somewhere between 45 and $55 average transaction company, that's another problem that jewelry causes. And I use the example sometimes that this is like kind of opening up a Neiman Marcus, let's say, in the middle of the original spot off what Levittown was going to be. (indiscernible) a great store, Levittown is a great city -- but guess what, they don't match up well.

Is the answer then that even if it means that short term the earnings might be a little soft, are you going to stick with testing these new concepts? Is that --?

We will not -- now that we are staffed up, we will absolutely move forward on the new concepts and the lower price points. And we will attempt to -- not attempt, we will, we will manage the process and not expectations, hard-core expectations ahead of some good judgment.

Peter Eisele, Snyder Capital Management.

Are you seeing a broadening in your customer base? In other words, are you getting more new customers or are you just selling these new products or categories to (inaudible) --?

We are actually going to address that issue today, because I think intuitively, with the 20 percent increase in unit sales, I hesitate to say I know. But my sense is is that we are getting an amazing amount of new customers, and the problem that we had in addressing that, particularly for this quarter, was that we were so screwed up last year with our information gathering that I would hesitate to put counts over counts on the customer side last year. But to run -- the fact that basically all of our merchandise was either jewelry or computers, and now (inaudible) literally doing millions and millions and millions of dollars in apparel, cosmetics -- I will give you an example. Up until about a year ago -- it seemed like everything happened when Liz Haesler got here. Up until about a year ago, the biggest cosmetic hours, for example, that we ever had were probably in the 40, 50, 60, $70,000 range. We are actually running cosmetic hours on a jewelry channel -- first of all, we are running significantly greater cosmetic hours. Liz, you can tell them what when I finish, but we have done 200, 300, as much as $400,000 in a cosmetic hour. On the other hand, some of the cosmetics we are putting on the air are not working as well. So we are going forward with cosmetics but we are going to go forward with the right cosmetics. And how do you find that out? Well, you find that out by putting it on the air and figuring it out. The new customer count is, frankly, all coming from these lower-priced products. When we get the right lower-priced product, an average -- the average of the amount of people on calls in a given hour can be somewhere in the neighborhood of 30 to 40 to 50 people at our current price points. When we run good cosmetic hours -- we have literally hundreds of people on the lines, which we have never experienced before, hundreds of people on the line. And also, on the automatic ordering, on the VRUs. So yeah, I don't want to become overly optimistic that here we start to move the air time around, and all of a sudden our sales are better and our margins are better and November is up, whatever, 20 percent. But so far I think the merchandising organization has managed the process very well.

One other question. As you go through this transformation with broadening these categories and lowering the price points, you start to look a little bit more like a QVC or HSN. How are you unique, or how will you be different in terms of your (inaudible)?

Liz, why don't you -- we are not going to go down the $45 path. Liz, why don't you take a shot at that?

Obviously, our current jewelry business is really founded on unique product that they can't get anywhere at value prices. And even though we are looking to decrease our price, our focus is still on that unique product. So the apparel that we are doing, cosmetics that we are airing is product that they can't get anywhere else, that reflects a fabulous value which is really important to them. So we are not, as we roll out cosmetics and ready to wear, we are not focusing on brands that HSN or QVC are already --

Let me just say that if you look at the release, one of the things I think we have come to terms with as a Company is that you can't run a shopping channel like you run retail department stores. And what I mean by that is that a shopping channel, the person doesn't really care about your continuity of offer; meaning that, if you're a jewelry buyer and you bought tennis bracelets, you go and you get a $100 tennis bracelet all the way up to a $5000 tennis bracelet, and there's 20 of them. Our customer does not care whether we carry 100 or $2000. What they care about is that the tennis bracelet we put on the air is the best possible overt value; overt value meaning, I get it I don't have to touch it, the value is outstanding. Now that Liz has brought in Cuisinart and Versace Crystals and (indiscernible) the prices, they're a great value. I am not going to say that everything is a closeout, but they are all off-price purchases. So I think that our differentiation is still going to be higher priced than the competition. I think you're going to see more brands, real brands, not just celebrity type brands in the competition. And I think we're going to try very hard to make sure that the overt value is there. Because without it, nothings solid.

Steve Berenburg (ph), Gophen and Bloschburg (ph).

A couple of questions somewhat financial statement related. You've got EBITDA defined for nine months as 9.5 million. That includes the gain though, correct, on the sale of the TV stations?

That is correct.

Steve Berenburg You may have addressed this earlier, I got on a little late, but some questions on balance sheet, as well. I noticed year-to-date inventories are up 25 to 30 percent against a 10 percent increase in sales. Maybe you're building inventories for the Christmas season or something, but I was wondering if you could address that, as well as the trends in year-to-date in payables and receivables?

I will address the inventory, and Dick, you can address the payables. The inventory I think is up about $17 million. About a third of that is (indiscernible) and the balance of that is, frankly, all current goods. If you look at, for example, if you look at the 16 million and take it back down to about 11, in November alone -- based on our current trends -- we have on the orders that we've got in to date, we've got about 7 or 8 million in November above last year on orders to date. So I think what you've got is you've got an inventory that will come down dramatically based on our fourth quarter performance, but I will tell you that -- and I don't have it in front of me -- but the aging of the inventory is just terrific. This is all current goods, all brought in for the gift giving ideas. We just -- the first week of November, we anniversaried one of our biggest promotions for the year, which was also very successful. So I think that the content of the inventory and the timing of the inventory receipts is why it looks a little high, but it should look terrific again (inaudible) quarter.

So up just slightly versus a year ago then, you think?

Up slightly versus a year ago.

Adjusted (inaudible). You owned FanBuzz a year ago, didn't you?

Yes. Dick, when did the FanBuzz number come in?

FanBuzz would have been in the base as well. The increase is predominantly driven by (indiscernible), but I just want to reinforce what Gene said. The current status of our inventory is in a much, much better position than its ever been, meaning we are not stuck with a lot of old stale goods. As we went through our oracle issues last year, our biggest problem was we got backed up in inventory and got stuck with a lot of old aged goods. Now, we had cleaned all that out and we are very current here. So we actually -- A, because we're feeling good about the quarter and feel good about our inventory position, but really need to keep an eye on it.

On the payables, Dick?

Payables largely just follows the inventory flow. Our two largest payables are cable fees, which are generally pretty routine monthly payments, and inventory builds or fall offs. So payables largely falls out. I think you asked about receivables? That probably falls into the business as well. We started the year with about 76 million in receivables; currently we are about 65. The 76 was high because our fourth quarter (multiple speakers) --

So that goes back up again?

Right. So it just kind of flows with the top line in the business.

And then, it was -- last question -- it was this quarter, the October quarter a year ago that you had -- that was when the Oracle problems came to light, correct?

No, not exactly. What happened was it was probably the culmination. The Oracle problems started around the 15th of June.

Of '02?

Of '02. 15th of June. And culminated in this third quarter last year with us kind of starting to get it cleaned up. But in order to clean it up, and in order to -- we alienated a lot of our customer base, and that's why we did all the promotion during the quarter last year.

I am showing no further questions at this time. (OPERATOR INSTRUCTIONS).

I would like to thank everybody for your attention and your interest on the call. This will probably be my last call; I have enjoyed my time. Thanks very much. I hope you all have a very nice holiday season. Thanks.