Oxford Industries Inc (OXM) 2021 Q4 法說會逐字稿

Greetings. Welcome to the Oxford Industries, Inc. Fourth Quarter Fiscal 2021 Earnings Conference Call. (Operator Instructions) Please note, this conference is being recorded.

I'll now turn the conference over to your host, Jevon Strasser. You may begin.

Thank you and good afternoon. Before we begin, I would like to remind participants that certain statements made on today's call and in the Q&A session may constitute forward-looking statements within the meaning of the federal securities laws. Forward-looking statements are not guarantees, and actual results may differ materially from those expressed or implied in the forward-looking statements. Important factors that could cause actual results of operations or our financial condition to differ are discussed in our press release issued earlier today and in documents filed by us with the SEC, including the risk factors contained in our Form 10-K. We undertake no duty to update any forward-looking statements.

During this call, we will be discussing certain non-GAAP financial measures. You can find a reconciliation of non-GAAP to GAAP financial measures in our press release issued earlier today, which is posted under the Investor Relations tab of our website at oxfordinc.com.

Due to the material impact of COVID-19 on our business in 2020, we will also include comparisons to our 2019 results.

And now I'd like to introduce today's call's participants. With me today are Tom Chubb, Chairman and CEO; Scott Grassmyer, CFO; and Anne Shoemaker, Treasurer.

Thank you for your attention. And now I'd like to turn the call over to Tom Chubb.

Thank you, Jevon. Good afternoon and thank you for joining us. We are pleased to be reporting on what was an extraordinary fiscal 2021 year for Oxford and our plans for an even better year in fiscal 2022. Scott will provide additional detail in a moment, but here are some of the highlights.

Each of our happy upbeat lifestyle brands, Tommy Bahama, Lilly Pulitzer, Southern Tide, The Beaufort Bonnet Company and Duck Head, had its best year ever in 2021. All 5 brands posted strong top and bottom line growth, not only over 2020, but also as compared to prepandemic 2019 levels. Compared to 2019, excluding Lanier Apparel, which we exited in 2021, net sales increased 9% for the full fiscal year and 8% during the fourth quarter. On an adjusted basis, our consolidated fiscal 2021 gross margin of 63%, operating margin of 15% and earnings of $7.99 per share were all records for Oxford. While a terrific year for all, the biggest contributor to our record earnings was the performance of our largest brand, Tommy Bahama, where sales grew 7% versus 2019 to a record $724 million and adjusted operating margin nearly doubled to 16% over the same time frame.

Our outstanding results are a testament to strong execution of the strategic priorities we established to drive our recovery out of the pandemic combined with our straightforward formula for success.

From a branding perspective, across all 5 brands, we remained true to our happy upbeat brand positioning and then supported the brands with the classic 3 pillars of any great brand, A+ product, A+ distribution and A+ communication.

From a product perspective, we delivered innovative and differentiated product that is true to the DNA of each of our brands while at the same time being relevant to today's marketplace and consumer. Among the hundreds of new products we delivered during the year, prime examples include our Tommy Bahama men's IslandZone Chip Shot short and Women's Palm Modern Swimwear; in Lilly Pulitzer, our luxe cotton French Terry Harriet dress, along with numerous Luxletic additions; and in Southern Tide, our Sun Fair capsule collection. All of these products are on brand and play well with the ongoing trends towards casualization, easy-to-wear and easy care and the desire for performance-inspired product. And our customers absolutely love them.

From a distribution perspective, we continue to evolve our premium full price selling platform to ensure that we are making our brands, products and services available to our customer when and where she wants them.

In our view, a customer-focused modern distribution platform for any fashion brand should include a balance of company-owned retail stores and company-owned e-commerce complemented by a strategic wholesale business. By strategic, we mean a wholesale business that is brand-enhancing, profitable for us and our wholesale customer, and exposes us to a broader base of consumers who might not otherwise be aware of our brands.

We also believe it is important for modern brands to provide an experiential element. We provide exceptional guest experiences in our beautiful retail stores and in our very unique Tommy Bahama bars and restaurants.

We believe our sales for fiscal 2021 are reflective of the very balanced and modern distribution platform, with 39% coming from company-owned retail, 32% from e-commerce, 9% from restaurant and bars, and 20% from wholesale.

From a communication perspective, it's as important as ever to have creative content that is compelling and in the modern marketplace that is specifically tailored to the digital media that dominates the attention of today's consumer. In addition, it is critical that brands be able to understand and serve the needs and desires of existing customer audiences and identify potential audiences that share those same needs and desires.

Finally, brands need to have the techniques, disciplines and skills to effectively and efficiently deliver compelling creative content to those existing and potential consumer audiences in a way that attracts new customers, retains existing customers and encourages all to increase their engagement and spending with the brand.

The measuring stick for our success with these efforts is our customer KPIs where our customer count finished the year at over 2 million active brand customers compared to roughly 1.8 million at the end of fiscal 2019. Our talented, highly engaged teams will continue to evolve and update our products and brand messaging to ensure they stay relevant for today's consumer and remain true to each brand's unique DNA. This has been and will continue to be the key to our success as we deliver long-term value to our shareholders.

As terrific as fiscal 2021 was, we believe the prospects for 2022 and beyond are even brighter. The momentum that we created during 2021 has continued into the early part of 2022, and we have outstanding plans to deliver double-digit top and bottom line growth on a consolidated basis.

Our focus during 2022 will be on 4 strategic pillars, supported by the foundation of our business, our incredible team of people. First, we will grow our brands for the long term. To do this, we have detailed plans to continue improving our clarity on brand positioning and voice. As stewards of our lifestyle brands, we are in the dream business, and ensuring that each brand inspires optimism and aspirations for happiness is paramount. Our brands will continue to deliver A+ product, A+ distribution and A+ communications.

Second, we will continue to enhance our digital and omnichannel capabilities to attract new customers, retain existing customers and drive frequency and spend. Across the enterprise, we have numerous people, processes and technology-related initiatives in place, particularly related to unlocking consumer insights in more effective ways and providing amazing, seamless customer experiences that will support and enhance our capabilities in these areas.

Third, we will drive operational excellence across the enterprise to better serve our customers and make sure that we are operating as efficiently as possible. To support this initiative, we are focused on topics such as fulfillment and distribution, retail real estate strategies, process improvement, technology across the enterprise and effectively communicating our ESG initiatives.

Fourth, we will continue to manage our portfolio and align our capital structure to drive sustained profitable growth. Detailed plans include assessment of market opportunities to better direct future growth plans, refining our brand health metrics to help us better manage our businesses, evaluating both organic and acquisition-based growth opportunities, benchmarking ourselves against competitors and monitoring our capital allocation strategies over time, including returning capital to shareholders.

Lastly, we have plans to continue to develop our people and our teams to make rewarding careers possible for our people and to ensure the company can execute our strategy now and in the future. To do this, we are focused on the acquisition and development of exceptional and diverse talent, leadership succession, minimizing the impact of the so-called Great Resignation and maximizing engagement and effectiveness of remote and hybrid workers. People are our most important asset, and we will continue to invest to ensure that we continue to have the best.

We look forward to updating you on the progress of all these plans as well as our results as this year progresses.

I'll now turn it over to Scott for more detail about the results in fiscal 2021 and our strong forecast for top line growth and operating margin expansion in fiscal 2022. Scott?

Thank you, Tom. Our operating groups executed well during 2021 and delivered record performance within each brand, as Tom mentioned earlier.

We had a record-setting fourth quarter that capped a terrific fiscal 2021 driven by continued strength in e-commerce, greater full price sell-through, and higher gross and operating margins.

In fiscal 2021, consolidated net sales were $1.142 billion. Excluding Lanier Apparel, sales increased 9% over fiscal 2019 to $1.117 billion, with a continued shift in the composition of our revenue towards full-price direct-to-consumer.

Our full-price e-commerce business grew significantly, up 58% versus fiscal 2019, with meaningful double-digit increases in each of our brands. On the bricks-and-mortar front, our retail stores and restaurants saw a particular strength in Florida, the Southeast and Texas compared to fiscal 2019.

In fiscal 2021, our adjusted gross margin was 63% compared to 57.6% in fiscal 2019. This 540 basis point improvement was fueled by strong full-price sales, a shift in sales mix towards full-price direct-to-consumer channels and higher IMUs, particularly in innovative new performance offerings. Higher freight costs, including the use of air freight, negatively impacted gross margin by 160 basis points for the full year with a 300 basis point impact in the fourth quarter. For the full year, our operating margin increased 650 basis points on an adjusted basis to 15% of net sales, driven by improvements in gross margin and leverage within SG&A.

I'd now like to walk you through our projections for fiscal year 2022, which began January 30. As we look to 2022, we expect our business to remain robust. Our e-commerce business is expected to continue to expand driven by enhanced digital capabilities, focused on new customer acquisition, retention and increased spend. Our physical locations are seeing traffic continue to improve, and we anticipate year-over-year sales growth in all regions.

Our strategic positioning to emphasize direct-to-consumer channels, which represent 80% of our business, has enhanced our continued ability to execute well within a disruptive supply chain as our talented merchandising teams continue to create compelling assortments on our sites and retail floors as product arrives.

Our ability to navigate supply chain challenges, along with our product innovation, are also driving a robust forward order book in our wholesale channel. We expect modest gross margin expansion as we continue to see benefits of higher IMUs, partially offset by what we expect to be a somewhat more promotional environment. We expect modest SG&A leverage despite inflationary cost pressures, including a challenging labor market.

Putting together these dynamics, we expect to deliver double-digit top and bottom line growth with operating margin expansion in fiscal 2022. First quarter sales are expected to increase from $266 million, which included $12 million of Lanier Apparel, to a range of $315 million to $335 million, reflective of very strong quarter-to-date results in both direct and wholesale channels. Full year sales are expected to increase from $1.142 billion in fiscal 2021, which included $25 million of Lanier Apparel, to a range of $1.245 billion to $1.285 billion in fiscal 2022. Increased sales reflects double-digit increases in our direct-to-consumer business and a healthy wholesale order book. Our effective tax rate for fiscal 2022 is expected to be between 24% and 25%.

On an adjusted basis, we expect EPS in a range of $2.65 to $2.85 in the first quarter of fiscal '22 compared to $1.89 last year. For the full fiscal year, we expect adjusted EPS in the range of $8.75 to $9.15 compared to $7.99 in fiscal 2021.

Our business is supported by our strong balance sheet. Here are some highlights. We ended fiscal 2021 with inventory in excellent shape. On an as-reported LIFO basis, inventory decreased $118 million at the end of the fourth quarter compared to $124 million in the prior year. While on a FIFO basis, inventory increased by 12%, excluding the impact of Lanier Apparel. We expect efficiencies gained through our enterprise order management systems will continue to allow us to do more business with lower inventory levels.

Our liquidity position is strong with no debt and $210 million of cash and short-term investments at the end of fiscal 2021.

Capital expenditures in 2021 were $32 million, and we expect capital expenditures to be approximately $50 million in fiscal 2022, reflecting continued investments in information technology initiatives, new store Marlin Bar growth and the remodeling of certain existing locations.

I'm pleased to share that our Board of Directors increased our quarterly dividend from $0.42 per share to $0.55 per share, a 31% increase over the prior level. To date, we have repurchased approximately 430,000 shares at an average price of $87 per share for a total of $37 million, including $8 million in fiscal 2021, following the December announcement of our Board's new share repurchase authorization. We are pleased to find meaningful ways of returning capital to shareholders.

Thanks for your time today, and we'll now turn the call over for questions. Shamali?

(Operator Instructions) Our first question comes from the line of Susan Anderson with B. Riley.

Nice to see some momentum continuing in the business into this year. I was wondering if maybe you can talk about the pricing that you're expecting for this year versus last year. And then also just the positioning of inventory, are you expecting units to be up this year, really growth to be driven more by pricing?

Yes. So I'll comment on this a little bit and let Scott provide you a little additional detail on the impact on the financials. But we are taking price increases in a very strategic and selective way. Some of those have already rolled out, and there'll be more coming in the second half of the year. And again, Scott will elaborate on this, but I think those will keep us ahead of the product cost inflation that we're seeing so far.

And from an overall growth standpoint, if you look at the double-digit growth that we're projecting, that's not just price increases. That's unit growth as well. So we feel really, really good about where the business is, Susan. I think that the momentum that we generated in 2021 was really about actions that we took in 2020. And even prior to 2020, we realized the benefits of those actions in 2021, and we'll continue to see it in 2022 and beyond.

And then as we elaborated on, we're not done yet. We've got great strategic priorities for the year that I walked through in my part of the call that I think are going to continue to enhance our ability to reach and serve the needs of even more customers.

Scott, do you want to elaborate more on the pricing?

Yes. As Tom mentioned, it's both pricing and units, and it's pretty balanced between the 2. And our price increases are -- there's some in for spring, but there'll be more in for summer and even more in for fall resorts. So the goal was to make sure we're moving price to stay ahead of some of the input cost pressures we have. And I think we've -- I think we'll accomplish that. And we do expect to expand -- modestly expand gross margins, even though we might be a little more promotional just having more inventory. And I think the whole market will be a little bit more promotional than last year, and I think we'll still be able to expand gross margins in this environment.

Great. That sounds pretty positive. And then if I could just add one follow-up. Maybe if you could talk about what you're expecting from growth by brand for this year. And then also just on the Tommy brand, Tommy Bahama. Can you talk about the performance or give us an update on men's versus women's and kind of how you're expecting that performance also for this year?

Yes. So I'll start and then let Scott again elaborate on a few things. But in terms of growth across all the brands, it's really pretty balanced. I mean they all, again, are going to have a terrific year, at least that's what we're forecasting. They all had record years last year, incredible top and bottom line growth. And we've got more of that across all 5 brands again for this year.

And then on Tommy, men's versus women's, what I'll tell you, Susan, is that men's is incredibly hot, and women's is even hotter right now. It's really just unbelievable to see what's happening in our women's business.

We've had a couple of things that have happened. We've had a day recently where we did $1 million of women's sportswear in our online business, which is just sort of a milestone that we've never reached before in a single day. We've had, in the month of February, for most -- much of the month, our women's business online was actually bigger than our men's business. But men's was growing very robustly, but women's was growing even faster.

And again, this is not a fluke, Susan. These are very deliberate markets that have to do with the way that we've set up our sourcing. We've completely realigned that over the last several years, the way that we're designing product, the merchandising of our line. So a couple of years ago, we were kind of upside down and had 2/3 fashion, 1/3 basic. Now we've flipped that. So we've got -- the predominance of our inventory dollars are in more core type products, which is a much better way to drive a business. We still have fashion, but we're much more balanced in that regard.

And then on marketing, and I'm sure you paid attention to it, Susan, but we're leaning very hard into our great women's swim business as a way to really introduce women and get them to look at the brand. So if you've noticed online, we've done a lot of marketing with that, and it helps bring women in. Then they come in, they see everything that's in the line. They love it. They buy it. And it's just -- it's a really, really great story.

So the total business is superstrong. Men's is very, very strong and growing rapidly, but women's is even stronger right now, and we'd love to see that. It's such a great story all the way around.

Great. And what percent is women's now of the business?

Full -- it's a little over 32% in our full-price retail and e-com business, and that was up from about just over 30% in '19. And it was around 29% in '20. But in '19, it was a little over 30%. Now we're a little over 32%. So we gained 2 points of share in '21. And as Tom mentioned, we're on pace to gain again in '22.

And that's with men's growing. So to gain 2 points in women's when you're at 30% and men's is growing, you understand how the math works. You've really got to be doing well. And it's just -- it's great to see.

Our next question comes from the line of Steve Marotta with CL King & Associates.

Congratulations as well on a terrific fourth quarter. Tom, can you talk a little bit about the supply chain at this moment? What flow of goods looks like right now? What do you expect that to look like, say, 3 to 6 months from now? And maybe what do you expect it to look like by the end of the year?

Yes. No question about it. We're seeing some supply chain headaches like everybody else in the industry is. I would tell you that -- I'll start with saying that I think our teams have done just a phenomenal job of managing those supply chain issues, being very agile and nimble and mitigating the impact of them. But we've got sort of delays in the factories with COVID issues, and they're not having full workforces and/or having to shut down for some period of days. We've got delays in the inbound shipping. We've got delays in the ports in the United States. Same things that you're reading about everywhere.

All in, that's probably lengthened out our product cycle time by somewhere in the 6- to 12-week range. We've compensated for that by buying significantly earlier than we did in the past, and that's one of the things that we're doing.

And then on the receiving end -- and Steve, you've heard of this -- heard this from us before, but we're being very nimble and agile about putting out on the floor, the product that we have. And in some cases, things end up being late. We just sort of remerchandised the line and worked with what we have. And then when the stuff comes in late, we merchandise it into the floor at that point -- and have really been very successful, and it's been a great learning for us. In some ways, it's one of those lessons that you hate to have to have learned, but what we've learned is that we can do that and still make the consumer very happy.

And with our business being so direct-to-consumer-driven, we've got the ability to do that. With it being 80% direct-to-consumer, we can -- we have our destiny in our own hands. We're able to do that. And while we would prefer things to get back to a more normalized situation, and they will eventually, I think we're doing a great job of handling it. And as you can see, it's really not hurting our results.

And then as the year progresses, do you see it getting any easier? Or do you still see a 6-week-ish delay, 3 to 6 months from now and maybe towards the end of the year as well?

Yes. I think some of the freight is -- will still start to alleviate somewhat as the year progresses. On the COVID side and delays at the factory, I certainly hope so, but I don't know that we're in a position to prognosticate on that too much. And I think what we'll do is we'll keep hoping it gets better and keep dealing with the situation as it unfolds. And I'm very confident in our ability to handle it.

I think if we proved over -- anything over the last 2 years is that we can deal with the delays and the other supply chain issues.

Sure. I understand that -- yes. Go ahead.

With our price points and margin structure when we do have to air freight, yes, it does -- it's a little headwind to gross margin, but we still have a lot of margin left. So we are -- we're still airfreighting when we need to, a little bit less than we were in the third and fourth quarter right now. But if we need to -- if there's an interruption, and we need to put goods on a plane, we can still do that.

That's helpful. And Scott, it looked like there was a step function in royalties in the fourth quarter. Can you talk a little bit about why that was and if that's expected to occur in the current fiscal year?

Yes. The -- we had a couple in royalties and other. The $33 million number for the year had about $15 million of gains that we adjusted out in our adjusted earnings. And so $15 million of that was -- when we get to adjusted earnings, we have taken that out, and that was the sale of a minority interest and the sale of a distribution center related to Lanier Apparel. So those are nonrecurring type -- the distributions that are hopefully nonrecurring.

You had to begin.

Yes. Yes. And then the rest was just we -- I mean, we had good growth in just most of our licensees also even after you adjust that $15 million out. So I think as our business has been strong, so our licensing business has been strong.

That's helpful. If I could just slip one more in, and I think I know the answer to this, but I also just want to make sure. Given your demographic, I doubt that the stimulus actions last year really helped, but did it help at all on the margin? There are quite a few consumer -- soft goods companies that are talking about a relatively difficult comparison from sort of late March to early May given that bump up in consumer activity in the year ago period. I'm wondering how acutely you felt that in your results last year during that time frame and if those expectations are built into your guidance this year.

We certainly don't think that's what fueled our business last year, and we don't really expect much of an impact this year at all, Steve.

Yes. There was a step-up as we got into -- early February was a little soft last year. It got better, but we don't think it was stimulus-oriented, and we don't -- our business is really good right now, and we expect it to continue to be strong.

And Steve, you've no doubt seen all the macro stats on the level of demand deposits in the United States. And I think there's $2.5 trillion more in checking account or the demand deposit accounts more than there was at this point in 2019. There's a lot of cash out there, and we just haven't seen any indication to date that people are slowing down in their spending.

Our next question comes from the line of Dana Telsey with Telsey Advisory Group.

So nice to see the progress. As you think about the shaping of the year, first quarter, obviously, $265 million to $285 million, the guide, it seems like the highest first quarter we have had. And typically, second quarter is the best quarter of the year. Anything we should be watching on the shaping of the year in terms of the nuances that are out there? And I just have a couple of follow-ups.

Yes. Your point that -- yes, the first quarter year-over-year, we would expect to be our strongest year-over-year compare, but we still wouldn't expect, as always, Q2 should be a little bit bigger in Q1, and then Q3 is always our softest quarter. So we expect that cadence to be somewhat similar, but just not the year-over-year growth in the out quarters that we'll see in Q1.

And that's not a slowdown. It's that last year first quarter, we didn't -- was not as strong as the remaining 3 quarters. If you remember, it was a good first quarter, but it wasn't anything like as good as the other quarters were, relatively speaking. And that's because the business didn't really wake up until about mid-March last year. So we were halfway through the quarter before things really started to perk up. And I think that's just everything to do with where the country and people's mindsets were with respect to COVID.

Yes. And then regionally, Florida, Texas, Hawaii, what are you seeing regionally? How is that doing? And what was so impressive is that with Lilly Pulitzer, obviously, the flash sale, you moved as much clearance and so it was higher margin and exiting the Lanier -- the sales from the existing brands actually were higher and made up for it. So the opportunity for sales growth going forward, if you were going to have better than expected in 2022, would it more likely come from the sales or from the margin side in your perspective?

Probably the sales. I think the margins are really quite robust. And there are some pressures out there on margin with all the inflationary stuff going on and then the fact that probably the market will get a little bit more promotional this year. So there are some margin pressures. We don't think we're going to go backwards. We think we're going to gain a little more, but we certainly won't have anything like the gain we had last year. And I think the upside would be with the sales, really.

And then regionally, Dana, the strong regions from last year continue to be really strong. So Florida, Texas, the Southeast, those traditional sort of sun side markets. But we are starting to see some really great signs of life in some of the markets that really didn't wake up that much last year, in the Northeast, Mid-Atlantic and Midwest. They're starting to improve there, which is just more opportunity for us, frankly.

And the uptick in CapEx, so the $50 million from the $32 million, how would you bucket that?

Technology is probably 60% to 65% of our spend. We've got some pretty major systems initiatives going on both at Lilly and Tommy. We do have some new stores. Even our smaller brands, Southern Tide ended the year with 4 stores. We've got 3 leases signed. And hopefully, we'll get another one. Beaufort Bonnet, which opened their first store very late in the year, they've got another lease on, and they're looking for others. And then Lilly and Tommy will open locations.

The Marlin Bar pipeline is still -- we're still trying to fill it up. So right now, we've only got one Marlin Bar in the numbers for '22, and we want to get back to that, say, 4 to 6 a year pace, and we're working hard to get that pipeline for '23. But '22, there's such a long tail on those that I don't think we'll get more than one open in '22. But technology being -- we've got some pretty -- a lot of remodels also. We always keep our -- remodel when we need to. We've got a fair amount of money going there. But technology is the big thing.

And the biggest piece within the technology space, I would broadly define as data -- or excuse me, digital and omnichannel sort of capabilities that we're really trying to step on the gas. We like what we have, but we want to keep our foot on the gas there.

And our last question comes from the line of Paul Lejuez with Citigroup.

It's Tracy Kogan for Paul. I had a follow-up on the questions about freight and supply chain before. I think you guys said you're expecting it to get better as the year progresses. And I think you said it was 300 basis points of pressure in the fourth quarter. I'm just wondering what your guidance assumes for actual freight pressure for the year? And then I have a follow-up.

Yes. We were 100 -- for the whole year, we're 160 basis points, but it was very heavy second half-oriented. This year, we've got some pressure in the first half. For the year, we would -- we expect it to get a little bit better in the second half. And for the year, we have a little bit less than 160 basis points pressure for the year.

And then I wanted to ask about your customer counts. I was wondering how your customer counts have grown since 2019 at both Tommy and Lilly. And then I was also wondering -- I think you have a rewards program for the Tommy restaurant business, but was wondering about loyalty programs at Lilly and Tommy in the apparel business.

Yes. So I'll start with the loyalty programs. And we do have loyalty programs in our smaller brands. We're working one -- on one in Lilly Pulitzer, and I suspect at some point that we'll have one in Tommy Bahama as well. But what we want to do, Tracy, is make sure that we've got differentiated loyalty programs that really make sense for us and our customer base. So it's an opportunity for us going forward. We're excited about what we've got coming in Lilly, and we're excited about what we've got going in the 3 smaller brands.

And then on the customer count question, as we mentioned in the prepared remarks, in aggregate, our active customer -- or brand customer count from 2019 to 2021 increased from 1.8 million to 2 million. I will tell you that, that was across all 5 brands. All 5 had significant increases in their customer counts from the end of 2019 to the end of 2021, which we think is a great indication of the strength of our brand and products and our ability to define and reach the appropriate audiences, connect with them with compelling creative content and get them to come visit us, engage with us, keep our existing customers and add new customers. And I think the proof is in the pudding. I think the numbers back us up that we've delivered on that.

What do you guys define as an active customer?

That's somebody that shopped within the last 12 months. So those are trailing 12-month numbers. So if somebody bought 18 months ago, they don't show up in that count. And that's something that we're continuing to look at and study. A lot of those people probably consider themselves very loyal customers, they just haven't been in, in a while. But the way that we're counting that for purposes of this reporting is trailing 12 months.

And we have reached the end of the question-and-answer session. And I'll now turn the call back over to Tom.

Thank you very much, Shamali. We appreciate all your interest today. Stay safe, and we look forward to talking to you again in June.

And this concludes today's conference, and you may disconnect your lines at this time. Thank you for your participation.