Revlon Inc (REV) 2017 Q1 法說會逐字稿

Good morning, ladies and gentlemen, and welcome to Revlon's First Quarter 2017 Earnings Conference Call. At the request of Revlon, today's conference is being recorded. If you have any objections, you may disconnect at this time.

I would now like to turn the call over to Ms. Siobhan Anderson, Revlon Chief Accounting Officer and Treasurer. Please go ahead, Ms. Anderson.

Thank you. Good morning, everyone, and thanks for joining today's call. Earlier today, we released our financial results for the quarter ended March 31, 2017. If you have not already received a copy of the earnings release, you can obtain one on our website at revloninc.com. On the call with me this morning are Fabian Garcia, our President and Chief Executive Officer; Juan Figuereo, our Chief Financial Officer; and Chris Peterson, our new Chief Operating Officer in charge of operations.

Before I turn the call over to Fabian, I would like to remind everyone of a few items. First, our discussion this morning might include forward-looking statements that are based on our current expectations, and are provided pursuant to Private Securities Litigation Reform Act of 1995. Information on factors that could affect our actual results and cause them to differ materially from such forward-looking statements is set forth in our SEC filings, including our 2017 Form 10-Q, which we filed earlier this morning. We undertake no obligation to publicly update any forward-looking statements, except for the company's ongoing obligations under the U.S. federal securities laws.

Next, our remarks today will include a discussion of certain GAAP and non-GAAP measures. On an as-reported basis, Elizabeth Arden's results have been included in the company's financial performance, beginning on the acquisition date of September 7, 2016. However, in order to provide comparative discussion, our remarks today will include pro forma results, which present the GAAP and non-GAAP results as if Revlon and Elizabeth Arden were a combined company for all of 2016. From a segment view, all of Elizabeth Arden's operating results have been included in the Elizabeth Arden segment.

In addition, consistent with our past reporting practices, the company has identified certain nonoperating items that are not directly attributable to the company's underlying operating performance. The adjusted measures are defined in our earnings release, and are also reconciled in the financial tables at the end of the release. And finally, our discussion today will include XFX variances, which exclude the impact of foreign currency fluctuations on the period-over-period variances. Our discussion this morning should not be copied or recorded.

And with that, I will turn the call over to Fabian.

Thank you, Siobhan. Good morning to all and thank you for joining our call today. This is the third time we'll report as a combined company. And while we have many areas of strength to discuss today, our financial performance for the first quarter was below our expectations.

As stated in this morning's earnings release, our first quarter as reported net sales were $594.9 million, an increase of 35.3% over the prior period. However, on a pro forma basis, net sales decreased by 5.3%, adjusted for foreign currency. During the quarter and as widely reported, most of our U.S. retail partners experienced lesser foot traffic, store closures and shopper channel shifting to online and beauty specialty retail. Although Beauty remains a growth category in the U.S., where and how consumers shop for beauty is evolving.

The effect of these marketplace dynamics particularly impacted our consumer segment in North America, which achieved net sales of $290.4 million, down 9.3% as reported compared to the prior year quarter. In addition to slowing mass retail consumption, which affected Revlon and Almay color cosmetics, we were up against Mitchum and SinfulColors innovation pipeline, which was not comped in the first quarter of this year. We also experienced temporary inventory reductions at key retailers related to the softness in consumption. Despite all these challenges, our iconic brands proved to be resilient, and we were able to maintain market share.

Our Professional segment also experienced declines for the quarter, with net sales of $108 million, down 6.2% as reported versus the prior year quarter. Professional segment net sales declines can be attributed to continued lower price competitor challenges for CND and to American Crew, which experienced slower replenishment of pipeline shipped in the fourth quarter of 2016.

Turning to the Elizabeth Arden segment. We finished the quarter at $192 million in net sales, up slightly 0.4% versus last year on a pro forma XFX basis. This modest growth was driven by the Elizabeth Arden brand, designer and heritage fragrances and strong international net sales. We are delighted to report our Elizabeth Arden brand achieved its ninth consecutive quarter of net sales growth.

Commenting on the balance of our company's performance, our international business continues to demonstrate strength, with high single-digit growth across all region. Our Consumer segment grew internationally, more than 9%, as reported, driven by Revlon color cosmetics, as well as the global expansion of the Cutex nail care portfolio. Revlon color cosmetics continues to experience robust international sale gain in Japan, Australia and Hong Kong.

The Professional segment also continue to grow internationally, plus 7%, as reported, behind Revlon Professional Be Fabulous hair care range and Revlonissimo professional hair color. Growth in this segment was driven by the Revlon Professional brand in the U.K., Italy, France, Mexico, Russia and Germany. The Elizabeth Arden segment also achieved strong international net sales growth, plus 10% on a pro forma XFX basis, driven by travel retail, Hong Kong and Singapore. Net sales for our licensed fragrances were driven by Christina Aguilera and Britney Spears, with international growth for these brands led by Germany, Austria and the U.K. In summary, international net sales were strong across all segments and all regions for the quarter, providing a solid base for our global expansion.

Moving now to one of the highlights from the quarter. We continued to make significant progress with the integration of Elizabeth Arden. As was outlined in the earnings release, we have successfully transitioned from integration planning to the implementation and realization of related synergy. As previously reported, our multiyear estimate of annualized synergies and cost reductions increased to $190 million. We expect to realize between $50 million to $60 million this year, with $9 million benefiting our P&L in Q1 already. We expect to sequentially increase these savings over the balance of the year.

As you may recall, there are 3 building blocks that deliver these synergies: in-sourcing of Elizabeth Arden manufacturing, procurement efficiencies that are realized through our enhanced scale and organization restructuring. At the beginning of March, we began producing Elizabeth Arden licensed fragrance products in our El Carretero Mexico factory, and we are on track to start to produce skin care, color cosmetics and other fragrance items in our manufacturing plants in the U.S., Mexico and Spain in the second half of the year. Following a strategic supplier summit held in February, we have forged important purchasing partnerships with key component, fragrance and raw material suppliers that will contribute to significant cost synergies and reductions in the second half of this year and ongoing.

Regarding organizational structure. We announced in mid-January our new brand centric operating model, better aligned with our global growth strategy. With a new org design in place, we have also taken steps to enhance our capabilities by recruiting new leadership with deep beauty expertise to manage Revlon and the Elizabeth Arden and fragrance business. We have also created a marketing center of excellence to elevate our digital capability, customer relationship management, consumer insights and analytics and hire a Chief Creative Officer to elevate our brand esthetics across all touch points. While we have made great strides in capturing synergies and cost savings from the integration of Elizabeth Arden, we have also begun to leverage our broader portfolio of beauty brands, deep commercial expertise in the mass prestige and professional account and enhance footprint to accelerate our global expansion.

Now before closing, I'd like to share with you some of the key strategic initiatives that we have already put in place to restore growth in the U.S. To remind you, our long-term growth strategy is focused on strengthening our brands, making them accessible to consumers wherever and however they shop and investing in them. We have taken actions across all brands and channels to drive growth, so let me take this opportunity to highlight a few of those actions.

Almay's new stronger and more modern positioning, which celebrates individuality, inclusiveness and self-expression has been positively received by retailers and consumers alike. In fact, several retailers have agreed to expand their retail footprint for the brand. Almay will debut new product innovations, new packaging and new advertising beginning in the second half of this year with a completely restaged brand presented across all touch points by the first quarter of 2018.

To restore growth in our traditional and mass retail channels, Revlon has successfully tested a new merchandising concept that elevates the overall in-store beauty shopping experience, on par with best-in-class beauty specialty retailers. The new fixture provides testers, so consumers can try products on shelf, showcase curated products with how to get the look graphics, and has an upscale more modern esthetics. We will start to expand this format into specialty and select mass retailers later this year.

We also continue to focus on capturing our fair share of growth online and sharpening our capabilities in e-commerce. Our Elizabeth Arden business continues to achieve double-digit sales growth online, outpacing the other channels, with strong double-digit sales growth in China, the U.S. and the U.K. The Love Project, a digital-first campaign sponsored by Revlon, helped to advance the way we communicate with consumers via social channel, positively impacting consumers' perception of other brand's modernity and relevance, and helped double our Revlon business on Amazon. We're becoming more fluent in digital commerce and communications, and we'll build social communities with our beauty influencers, and continue to explore all relevant online sales opportunity.

In closing, despite this quarter's disappointing performance, I remain optimistic by the strength and resilience of our iconic brands, and believe that the actions we're taking to make them even more modern and relevant will deliver long-term results. I remain confident on our strategy to continue to diversify our channels, especially direct-to-consumer, while expanding across key geographies with a focus on Asia and Latin America. And we have assembled an outstanding leadership team with the capabilities and expertise that it takes to build a top 10 ranked world-class beauty company.

Before I turn the call over to Juan, I wanted to introduce Chris Peterson, who joined our company a little more than 2 weeks ago as Chief Operating Officer, responsible for global operations with oversight for global supply chain, finance and IT. We are delighted to have Chris on board, and are looking forward to benefiting from the deep experience he brings. Welcome, Chris.

Thank you, Fabian. This is an exciting time to join Revlon. The company has a strong portfolio of brands, a global footprint for with room for expansion and a talented leadership team. I believe there is significant opportunity to create shareholder value over time and look forward to contributing to the company's growth ambitions. I intend to onboard quickly, and plan to have more to share on the Q2 earnings call.

Now let me turn the call over to Juan.

Thank you, Fabian and Chris, and good morning, everyone. As a reminder, some of the comments I'm about to make are based on non-GAAP results and are reconciled in our press release.

Starting with our total company results. We reported net sales of $594.9 million, an increase of 35.3% over the prior year quarter. However, on a pro forma XFX basis, net sales decreased by 5.3%, mainly driven by the North American issues that Fabian previously described. There were 4 main items that impacted operating profit performance this quarter. First, significant net sales decline in North America, mainly in mass and department store channels; second, a decline in gross margin, mainly driven by lower sales in North America, coupled with unfavorable product mix and the purchase accounting adjustment to cost of sales; third, approximately $37.6 million of nonoperating cost primarily acquisition-related; and fourth, integration-related cost synergies are beginning to favorably impact results.

Reported gross margin was 55.4% compared to 65% in the prior year period. The decline was driven by the addition of the lower-gross margin Elizabeth Arden business, as well as a $16 million noncash inventory adjustment associated with the acquisition accounting for Elizabeth Arden, which adversely impacted cost of sales in the first quarter of 2017.

Adjusted gross margin was 58.2% compared to pro forma adjusted gross margin of 60.4% in the prior year period, a decline of 220 basis points due to less overhead absorption, the unfavorable impact of product mix and higher promotional cost within net sales, partially offset by the realization of approximately $3 million of cost synergies within the Elizabeth Arden segment.

As reported, net loss was $37.4 million compared to as-reported net income of $11 million in the prior year period. During the quarter, the company realized approximately $9 million of synergies, which benefited the Elizabeth Arden segment results and reduced structural corporate SG&A expenses.

Moving now to our segment results. The Consumer segment reported net sales of $290.4 million, down 9.3% as reported and 9.1% on an XFX basis compared to the prior year quarter as a result of the effects of the North America marketplace downturn, partially offset by strong growth internationally. Consumer segment profit was $32.9 million in Q1, representing an as-reported decrease of 43.7% or 44.2% XFX versus the prior year quarter, primarily due to lower gross profit as a result of a decline in net sales in North America.

Turning now to the Elizabeth Arden segment. We finished the quarter at $192 million in net sales, slightly up versus last year on a pro forma XFX basis. Elizabeth Arden segment profit was $14.3 million in Q1, representing a 25% pro forma XFX increase versus the prior year quarter, primarily driven by lower cost of goods sold as a result of cost reductions related to the Elizabeth Arden integration, as well as the favorable impact of product and channel mix.

Finally, in the Professional segment, net sales were $108 million, down 6.2% as reported, and 4.9% XFX versus the prior year quarter, driven also by North America, partially offset by strong growth internationally.

Professional segment profit was $16.1 million in the first quarter, representing an as-reported and XFX decrease of 37.1%, primarily resulting from lower net sales and unfavorable product mix.

Turning to liquidity. Operating cash flow was a use of $85.6 million in Q1, an improvement of $14.2 million from a use of $99.8 million in the prior year quarter. The improvement was driven by favorable working capital changes, partially offset by higher payments for interests, inventory purchases, integration cost and capital expenditures.

In 2017, we expect to spend approximately $100 million to $120 million in capital expenditures, and approximately $60 million to $70 million in permanent display. Our expected capital expenditure for 2017 include approximately $50 million for the integration of Elizabeth Arden.

We continue to feel good about our liquidity position. As of March 31, 2017, we have drawn $40.9 million on our revolving credit facility and had approximately $385.2 million of gross liquidity, consisting of $121.1 million of unrestricted cash and cash equivalents as well as $264.1 million in available borrowing capacity under our revolver.

Turning now to integration cost synergies. As Fabian indicated, we're now in full execution mode when it comes to realizing the Elizabeth Arden integration synergies. We recently increased our estimate for annualized multiyear synergies to $190 million, and we now expect to realize approximately $50 million to $60 million in the current year. During the quarter, we initiated most of the actions that will help us ensure realization of the current year cost synergies. As previously indicated, we realized approximately $9 million of cost synergies during the first quarter.

In order to realize the multiyear synergies, we expect to recognize approximately $65 million to $75 million of total pretax restructuring and related charges over the course of the program. In Q1, we incurred $1.1 million of restructuring and related cost and $16.9 million of non-restructuring integration cost.

Total aggregate cost incurred since the acquisition amount to approximately $36 million in restructuring charges and approximately $39 million of non-restructuring integration cost. In addition, the company funded approximately $3 million of integration-related capital expenditures in the first quarter.

In closing, this was a disappointing quarter for us in the U.S. Encouragingly, our international business is growing and building momentum across all of our focus markets, with particular strong performance in Asia. The integration of Elizabeth Arden is going very well, with cost synergy realizations coming in strong ahead of our revised estimates. Looking forward, we feel very good about the strategy and the actions we're taking to restore growth in North America and to continue to expand and accelerate growth international.

Now I will turn the call back over to Siobhan.

Thank you, Juan. This concludes our prepared remarks, and we would now like to open up the call to your questions. Operator, please prompt the participants for questions.

(Operator Instructions) And we'll go first to Grant Jordan with Wells Fargo.

I guess, first, just wanted to drill a little bit deeper on the North American Consumer segment. Help us figure out like how much of it is consumers just slowing down purchases versus shifting purchases out of the mass channel versus share moves within the mass channel?

A lot of it is shifting. We have recent consumer data to indicate that about half of consumers are now buying online, and that still 74% of consumers are buying in mass and traditional retailers. So there is only channel purchasing, and the way we think about it is consumers are spending more dollars in other channels where we're not as strong.

Grant, this is Juan. Just to add just a little bit more color. If you were to take the total sales declines, these are just very rough orders of magnitude, about 1/3 was consumption, roughly about 1/3 was promotional activity, and those really were the main drivers of the sales decline.

And then like how do you go about getting your fair share within, say, online?

We're developing capabilities. We've opened our business in Amazon this quarter, and we need to do more of that and gain more scale in all of the online e-tailers, including not just Amazon, but our partner dot-com sites. And there's a lot of work going on, as you can imagine, in that front. We feel very encouraged by how we're doing with Elizabeth Arden in the 3 largest markets: The U.K., the U.S. and China. And we're adding capability at a frantic pace to make sure that we increase our capability to impact also Revlon.

Okay. And then my last question, whenever you look at Elizabeth Arden, you're obviously up on the segment profit. But I think you said $3 million of the increase was due to the cost saves, and at what point do you think you'll build up, I guess, improve the underlying Elizabeth Arden business? Well, you talked about on the roadshow like the benefits of being a larger company and negotiating with your retail partners, when do you think some of that should start to flow through?

I think this is going to be gradual, Grant. This obviously doesn't happen overnight. We just came back from NACBA with great success in meeting as 1 company with many of the largest retailers in North America. So we came out very optimistic that we can leverage the larger size of the company. We provide to them solutions as one company across categories where we compete. So we feel good about that. And internationally, we're starting to see the impact of that. So overall, market's growth is related to the fact that the companies are now integrated. And I could speak to you about Germany or the U.K. or some countries in Asia, where we're starting to benefit from the fact that we're a larger company.

We'll take our next question from William Reuter with Bank of America Merrill Lynch.

I wanted to ask another question about the North American consumer segment. If we were to look at the different brands, were there some brands that were struggling substantially more than others? And I guess, I'm wondering whether these are issues with the channel? Or if it's maybe certain brands that the consumers either don't have recent affinity for or the innovation hasn't been quite as successful. So if you could talk a little bit about that.

First of all thank, you for the question. The Revlon brand is doing well inside the North America mass channel, as we reported this year, we're sustaining the quarter. And everybody knows, Almay has struggled for a year. The good news is in Almay is that the relaunch of Almay has now been presented to the trade, and that the welcoming mat has been rolled out. We had terrific meetings with all those customers I referred to in NACBA and what had been a pattern of space reductions now is a conversation about space expansion. So our expectation is as we start to roll out a new Almay brand in the fall of 2017 and in its full bloom, if I can call it that way, in the first quarter of '18, we're going to see the trends in Almay start to turn. But between now and then, we need to attend to the issue that has been a long-term trend that is being very well documented.

Okay. That's helpful. My second question, I think you mentioned that 50% of consumers are shopping online for these categories. And I think you said something like 74% are shopping in mass. If you were to just look in big kind of buckets, if we were to think about the categories that Revlon competes in, what percentage of those products do you think are sold online versus brick-and-mortar retailers?

Hard to give you a number, but I would tell you it's more makeup and skincare than it is fragrance, but it depends on the brand. So very hard to pinpoint that. I think we need to take a macro view here. The consumer is buying omni-channel, and you need to be present and competitive in all channels and that's exactly our strategic intent. We have said repeatedly, our brands need to be accessible to consumers wherever and however they shop, and to gain the skill set to compete in some of these channels, we have to build the capability in-house. So that is what's happening, and obviously, that takes some time.

Okay. And then just lastly for me, when you guys initially did the Elizabeth Arden acquisition, over time, I think that there was going to be some revenue synergy opportunities. Can you talk a little bit about whether you guys have begun those efforts? And I guess, how fruitful you think that, that opportunity is going to be over time?

The opportunity over time is very fruitful, and it's where we're focused on. We're starting to benefit from that combination, as I mentioned before internationally, where we can see it in the top line. I mentioned the U.K. I mentioned countries in Asia. I mentioned Germany, so that is happening. And that here in the U.S., it's more the macro issue that's getting in the way of achieving those top line synergies.

We'll go next to Carla Casella with JPMorgan.

One clarification. Your CapEx number, the 100 to 120, that does not include the permanent display spending, does it?

No, it does not. It's a separate estimate for that. It's $60 million to $70 million.

Okay, great. And the 100 to 120, what's the timing on that? Because your 1Q run rate doesn't look like you're anywhere near that. Is the heavy spend going to be the middle of the year or end of the year? Any kind of timing guidance?

The heavier spend is in the second half of the year. That is consistent with the curve also for the synergies because a lot of the manufacturing CapEx comes in the second half of the year.

Okay. I'm assuming the display spend is also skewed to the back half, just given where you are today so far in display spend?

Yes, that's also correct. Not as much as the CapEx was also skewed to the back half. And so remember also what Fabian just indicated about the Almay relaunch that's going to happen in the second half of the year. And so a good portion of the display spend will go to support that.

Okay. And then in terms of the competition at mass, have you -- you mentioned 1/3 of the weakness in sales was consumption and service promotional activity. Have you lost shelf space at mass or promotional space at mass or was it just general promotional activity?

Let me comment on that, Carla. Well, we haven't lost any material space in mass. As you can imagine, the mass retailers and some of our mass competitors are resorting to increasing promotion to win the consumer back, and that was quite intense in the first quarter, and have innovated so far. And one would expect the fact that this behavior is typical because this is -- used to be a game of innovation. It started to become more of a game of promotion. And we need to be sure that we keep the consumer coming back because of the innovation we're providing because the brands are relevant and are strong and they become destination brands for the consumer to come back to us.

Okay. Then you mentioned some store closures had an impact. Was that mass, drugstore or supermarket? And when did the store closures occur? Are they completed now that we started second quarter?

The majority of the store closures we're referring to is the Macy's public domain documented foreclosures that have been happening since the fourth quarter and were taking place this quarter. The impact is included in our expectations.

Okay, great. So that was more on the Elizabeth Arden side than on the Revlon side?

Yes, yes.

Yes. And then in the event that Walgreens and Rite Aid combine or don't combine, are you stronger in one of those retailers versus another? And do you foresee some store closure consolidation on the drugstore space?

Well, I -- the way I will answer that question is we have had terrific conversations with Walgreens. As you probably have heard from them, they are including 2,100 beauty advisers in stores in North America. They have opened up the fragrance section in many of their stores, and they're testing new merchandising options for fragrance. And we are in the process of upgrading our walls in Walgreens for the Revlon and the Almay brands. So we feel very good about how the business looks in Walgreens and how they are approaching the improvement of the in-store beauty experience for shoppers in that very important chain. So we feel very good about that. The Rite Aid issue is a completely separate issue. And as we engage with the outcome of a final resolution of their merger or not, we will have to engage with Rite Aid separately if need it be.

Okay. And then did you -- I may have missed it. I had to jump for 1 second, but did you give any trend? Are you seeing the similar trends for the first quarter continuing in April?

That's public domain. So what we know from -- what we all know from this thing is that the market trends are not changing materially.

We'll go next to Hale Holden with Barclays.

This is actually [Chris] on for Hale. So I guess, can you talk a little bit about the cadence in the quarter? It was somewhat a consensus that consumer has disappeared in January and February. And do you see a little better trends in March? And also, I think you just said April is not necessarily trending better. So any color you can give us? That will be helpful.

Yes. I don't know that I would use the characterization of the consumer disappeared, but the characterization that consumer behavior was atypical is perhaps more precise, sorry. So the sequency on the quarter was worst in the beginning, better towards March. There's also a few calendar changes there with how Easter fell in the calendar. So we need to see the normalization of trends before we can adjudicate any substantive improvement to the trend.

Got it. So for the quarter, would you say your decline in mass channel is in line with the overall kind of industry? And what is your overall thoughts? Are you expecting like a second half maybe it's easier comparison, a little better outlook for the U.S. mass channel?

We are working really hard to make improvements in the second half on our sale revenue line by engaging with our trade partners to bring the consumer back to the channel, as I have said in prior conversations. It's all about innovation and making sure that our brands are strong. It is very hard for me to say today whether there will be a gradual improvement in market conditions because we need to continue to see how the market trend evolves over the next months going forward.

This is Juan. One point to note, sorry, is that as you have heard also from other consumer goods company is that in addition to the consumption, there was retailer destocking to some degree in the mass channel. So that also is an impact in the quarter.

Right. Related to that, can you comment on the channel inventory coming out of the quarter?

There was -- as was just mentioned, there was a reduction of inventory that was commensurate with the consumption decreases. As you know, some of our customers -- most of our customers replenish inventory based on algorithms that have consumption as their input. And that when that consumption goes down, they start to lower their inventories to keep the same number of days in inventory in their warehouse. So that happened in this quarter.

We'll go next to Karru Martinson with Jefferies.

So when we look at these inventory reductions, I mean, is this just going to be a continuation of how a new normal as we go forward? Or do you feel that you'll get some of that back as we progress through the year?

I think this is going to normalize eventually because the inventory will be a function of consumption, and consumption is expected to normalize at one point in time. When is that going to happen? I cannot tell.

Okay. And when you look at the cost savings, you talked about them increasing sequentially as we go through the balance of the year, but bulk of the CapEx spend on synergies will be in the second half. So would you say that when we look forward here to the second quarter, the -- a smaller increase and then the bulk of it still coming in the second half?

If you're referring to the cost savings, the majority of the cost savings, more than 60% will be in the second half of the year because the actions that we have already set in motion will be actually being implemented in the second half of the year, and most of them will be in SG&A in the second half of the year.

Okay. And when we look at the CapEx spend, how much of that is being allocated to e-commerce efforts? And where do you feel that, that spend should be over the next couple of years?

I don't think we want to get into the level of detailed disclosing the allocation of resources, our capital expenses to resources beyond what we have disclosed for the achievement of synergies.

(Operator Instructions) We'll go next to Matt Sweeney with Laughing Water Capital.

My questions have been asked and answered.

And we'll go next to Lucian Tira with HPS Partners.

Most of mine have been answered too. I just had a question of around whether you guys have a sense of how much of your overall product is currently being sold online versus in brick-and-mortar.

Yes, we do, especially for the Elizabeth Arden brand, call it about around 3% of our business is for Elizabeth Arden sold online, growing very high double digit.

So if we look at the overall consumer business though, how much of that is sold directly to a consumer in brick-and-mortar versus online? And I realize you guys are trying to build that up. I'm just trying to kind of reconcile that with the 50% of shoppers do so online, 75% in store.

I didn't understand your question. Can you repeat it, please?

I'm trying to get a sense of how much of your product is available online. And how I kind of build that up to the overall consumer sales, if 50% of shoppers shop for product online.

Our stores are available online, so it's more a matter of how we are commercializing those and how we are promoting those online, how effective we are in doing that and how competitive we are in doing that relative to the other brands available. So this is not a simple answer that one can provide because it's not just about availability on a site. It's about the ecosystem that surrounds that site and how a consumer engages with you and with your brand to eventually shop online.

And at this time, I'd like to turn the call back to our speakers for any additional or closing remarks.

Thank you, Dana. I want to thank everyone who is on the call for your questions and your continued interest in our business. I'd like to also take the opportunity to thank our teams around the world for their continued efforts to advance our business towards sustainable growth, and we will be hearing from each other in the next quarterly call. Thank you very much. Have a good weekend.

Thank you, and that does conclude today's conference. Thank you for your participation. You may now disconnect.