Q3 2019 Earnings Call
Ladies and gentlemen, this is the operator for today's conference is scheduled to begin momentarily until that time Airlines will again be placed on music cold. Thank you for your patience.
Ladies and gentlemen, thank you for standing by and welcome to the children's place third quarter 2019 earnings Conference call. This call is being recorded if you object to our recording of this call. Please disconnect at this time.
All participants have been placed any listen only mode and the form will be opened for your questions. Following the presentation.
After the speaker's remarks, there will be a question and answer session.
Asking a question during those times simply press star one on your telephone keypad to withdraw your question. During this time press the pound key it is now my pleasure to turn the floor over to Anthony Atari <unk> director of Investor Relations to begin.
Good morning.
And welcome to the children's place just conference call on the call today are Jane Elfers, President and Chief Executive Officer, Mike Scarpa.
Chief operating officer, Chief Financial Officer.
The children's place issued press releases early this morning and copies of the releases and presentation materials for today's call have been posted on the Investor Relations section of the company's website.
After the speaker's remarks, there will be a question and answer session. Before we begin I would like to remind participants that any forward looking statements made today are subject to the safe Harbor statement found in this mornings press release as well as in the company's FCC filings.
Putting the risk factor section of the company's annual report on Form 10-K for its most recent fiscal year.
These forward looking statements involve risk and uncertainties that could cause actual results to differ materially.
The company undertakes no obligation to publicly released any revisions to these forward looking statements to reflect events or circumstances. After the date hereof. After the prepared remarks, we will open the call to your question. We asked at each of you limit yourself to one question. So that everyone will have an opportunity and with that I'd like to turn the call over to Jay.
No.
Thank you Anthony and good morning, everyone. After reviewing Q3 results I'll provide you with an update on three key strategic areas of focus that supports continued market share gain.
First I'll discuss our recently announced Gymboree re launch plan next I'll update the status of our digital transformation and last I'll recap, how the execution of our strategic initiatives, along with our superior product and low pricing model position us to continue to capture market share.
In various economic environments.
Despite disruptive industry consolidation and persistent decline in U.S. birth rate.
First Q3 results.
Our key product categories resonated strongly with mom in the back to school season. The second most important shopping period of the year.
In fact, we believe we were one of the top destinations for key back to school categories that year further solidifying our pre eminent position in the U.S. kids specialty apparel market.
Our E Commerce business continued its stellar performance delivering 23% growth and representing a record 35% penetration to total sales a 650 basis point increase versus last year.
We also saw a return to higher AIU ours in our stores during Q3, primarily driven by less promotional activity.
[noise] driven by a strong back to school season, we delivered a positive 0.8% comp in Q3 on top of the positive 9.5% comp in Q3, a year ago, despite multiple headwinds, including prolonged warmer weather into late October .
Which negatively impacted sales of colder weather product in key regions across the country.
Considering our belief that there were elevated inventory levels at a basket of our key competitors entering the quarter. Our Q3 outlook provided on our Q2 conference call anticipated the high likelihood of increased promotional activity in the kids apparel space.
We also called out a very unfavorable year on year, whether compare in October as colder weather arrived early in October last year and provided a significant sales benefit in the final month of Q3.
However, our outlook didn't anticipate 2019 to be the second warmest September on record followed by prolonged warm weather through the end of October which hampered demand for our fall product throughout the quarter and our key regional market.
The extended warm temperatures when coupled with inflated competitor or inventory entering the quarter resulted in elevated promotions and the kids apparel space.
Particularly towards the end of the quarter, which had a further adverse impact on our sales and margin.
Inventory management continues to be a priority for us.
And we exited the quarter with inventories up approximately 3% to last year.
With seasonal carryover inventory down double digits.
And finally, despite the significant headwind we were able to deliver bps result, near the upper end of our guided range.
Shifting to the gymboree integration.
On October 15, we formally announce the early 2020 relaunch of the iconic Jim to rebrand.
Which mark the next phase of our exciting journey to bring that coveted brand back to its fiercely loyal customer base.
Our team hosted a media event in New York City to support the relaunch and showcase our spring 2020 Gymboree collection.
The response to the product was overwhelmingly positive as attendees, including bloggers and key Influencers gave high freeze to the product for capturing the core of what mom loves the most about the gymboree brand during its peak.
We encourage you to read the thousands of common gymboree Moms continued to post on our Jim Murray Social media sites.
The comments reinforce what we have discussed before she remain fiercely loyal to the gym rebrand and is not inclined to take her dollars elsewhere.
Our plan is to reintroduce the gym rebrand in early 2020 through a meaningfully improved digital experience on Jim Murray Dot com.
Complemented by shop in shop locations in over 200, TCP stores in the U.S. in Canada.
On many occasions, we have discussed that we have the dream customer a millennial mom.
And you can see it reflected in our quickly evolving omni profile.
Approximately 40% of our customer file is comprised of online and omni channel customers and this group increased approximately 14% in Q3 and now represents nearly 60% over identifiable U.S. sales.
As we continue to make significant progress driving more of our customers to join our omni channel rank and to spend more year on year as they make this transition.
This is a strong indicator that we have the ability to provide the millennial gymboree mom with the same type of omni experiences that we are providing to our core TCP millennial customers.
And we expect our enhanced offering for Jim Murray will be well received at launch.
The enhance personalized online shopping experience that Jim Murray Dotcom will offer a customer centric and vibrant online experience that the prior owner simply wasn't able or willing to provide.
The Genvoya rebrand did not heavy robust loyalty program and did not happen notable private label credit card initiative, which presents the children's place with a meaningful opportunity when considering approximately 80%.
TCP brand sales come from our my place reward and our private label credit card loyalty member.
Importantly, our loyalty members spent nearly three times, our non loyalty customers.
Additionally, the gymboree mom will benefit from the children's place transformational investments made behind omni channel digital fulfillment capabilities.
Following a carefully controlled relaunch of the gymboree brand at retail in early 2020.
We will provide additional insight into our future plans to address additional opportunities for the gymboree brand.
Our real estate team continues to execute on the strategy of opening new TCP locations in select centers that were highly productive for Jim Murray with six new TCP locations opened in Q3 that are each forecasted to post annualized sales volumes well in excess.
Of $1 million.
The openings are part of our high return strategy to capture the displaced gymboree market share with what we believed to be little risk of cannibalizing, our existing retail sales or sales of potential wholesale partners.
We previously discussed having identified 40 locations that were extremely productive for Jim Murray, where TCP does not currently has a presence.
These are centers, which had no existing children's place location to cannibalize and do not have another TCP location within a large radius.
In addition, these centers are largely occupied by other kids retailers, who based on the relative productivity of the center likely perform extremely well and these locations.
We believe the new TCP store sales in these locations will be nearly 100% incremental for TCP, allowing us to pick up share from key competitors as we bring the gym to rebrand back to these highly productive centers.
In the TCP locations that were co located in centers with close to Crazy eight and Jim relocations.
We comped several hundred basis points better than in centers with no co located stores. So we believe we're continuing to gain traction in securing market share from the abandoned crazy and Jim Murray customers.
So as the customer excitement around the return of Jim Murray continues to build into the early 2020 relaunch. We believe we're very well positioned to capture an outsized portion of the sales left behind by temporary.
Moving on to digital transformation.
Continuing to build off the foundational capabilities for personalization as part of our accelerated $50 million digital transformation investment we launched the initial test phase of personalization in early May which was focused on a limited number of identified behavioral segments.
Across five channels of distribution.
Building upon the initial results in Q2, we began to expand into additional segments in Q3.
Extending personalized content to approximately 10% of our customer file.
We continue to see encouraging lift in open rate.
Orders per customer net revenue and net margin per customer with continued strong migration of store customers to higher spending omni channel cheers.
Our goal is to extend personalized content to approximately 80% of our customer file during the first half of 2020.
The impact of digital personalization can be meaningful as we estimate that each point of conversion of our ecommerce traffic represents an incremental $80 million in digital revenue.
Shifting to our enhanced omni channel omni channel capabilities.
Our store fulfillment capabilities are another meaningful contributor towards the 200 million digital opportunity and they continue to outperform expectations as they drive enhanced options for mom.
Boston BOPUS continue to outperform expectations with customer online orders picked up in the stores in the mid teens and attaching at a nearly 20% rate.
Leading to a considerably higher than average ticket.
In a few weeks, we plan to begin piloting CEVA sale functionality, which will provide our moms with access to inventory from other store locations for the distribution center for products that are not in stock at a specific store location.
We'll be able to deliver that product directly to her and capture incremental sales that would have otherwise been lost absent the savings sell capability.
As discussed our online and omni channel customers increased by approximately 14% and now represent approximately 40% of our total customers.
Which is a nearly 600 basis point increase from a year ago.
In only a few short years, we have gone from 80% of our customers choosing to shop only in our brick and mortar stores to approximately 60% choosing to shop only in our stores.
We expect that our online and omni channel customer penetration will continue to increase as we ramp up our omni channel capabilities and execute upon our fleet optimization plan to ensure that we're serving our millennial customers preference for the convenience and ease of an on.
Line shopping experience.
Now I'll address how our cost and pricing model provides us with the valuable competitive advantage.
As we continue to mix, our product costs lower through continuing to migrate or sourcing activities to lower cost regions of the world. We are able to provide the value price points that we believe millennium moms are looking for as they continue to seek value in apparel purchases.
To fund their higher spend on experiences.
In fact, our APC for 2020 is projected down low single digits.
And importantly that is on top of in HCC decreased in 2019.
[noise] overtime, we believe that this pricing model has and will continue to allow us to create a meaningful pricing spread to the competitive set which in turn will allow us to capture a greater share of the estimated 600 million of sales donated each year.
Poorly position competitors.
Historically, our cost and pricing advantage has proven to be a benefit in good markets.
While also positioning us well in difficult economic years.
As evidenced by our low single digit comp growth in the most recent recessionary period.
The ability to competitively maintain lower hccs is especially important in a shrinking children's apparel market.
Driven by approximately 2.2 million fewer burst over the last 10 years versus the pre recessionary period, which represents an average decline of 1.1% a year over the last 10 years.
We believe that as the millennials paid down debt Mary Anne purchase homes later than prior generations growth in the children's apparel space will continue to be realized through market share gains for the foreseeable future.
That is why we believe that our ability to provide quality children's apparel at a value price.
Well also having the capacity and foresight to invest in digital transformation uniquely positions us for continued market share gain.
So as the industry continues its consolidation and news of Gymboree bankruptcy phase in favor of closings from other adult position retailers.
Our competitive advantages continue to widen.
Providing us the opportunity to capture a greater share of abandon revenue each year.
The revenue and margins driven from share gains support necessary digital investments.
Which further solidifies our strong positioning.
And lastly, with respect to current business.
Our digital penetration continues to increase.
And our eight you ours are strengthening as we focus on disciplined inventory management and a promotional environment.
However, due to meaningfully weaker than planned mall traffic quarter to date.
We are lowering our outlook for Q4.
Now I'll turn it over to Mike.
Thank you Jane and good morning, everyone.
Today, I will provide an update on a fleet optimization initiatives and our wholesale and international businesses before reviewing our financial results and our outlook.
First an update on fleet optimization.
We opened six locations in Q3, bringing our year to date openings to 10 as part of the 25 stores.
The opened over the next two years incentives that were highly productive for gymboree based on our detailed analysis of jewelry store sales.
We closed 12 locations in Q3, bringing the year to date closures to 27 locations.
We now plan to close approximately 60 locations in 2019.
This is our prior plan to close 40 to 45 locations.
Which would bring our total store closure number.
271 towards our plan to close 300 locations by the end of 2020.
Within malls, we continue to maintain a very high percentage of our locations in productive a and b centers.
Our real estate team continues to strategically limits, our exposure to the troubled outlet channel with only one of our stores located to what we've classified as it dying outlet center.
We are armed with meaningful flexibility in our real estate portfolio with an average lease term of 2.5 years. It was approximately 8000 lease events pending in the next few years.
Leaves us nimble as well equipped to close additional doors in response to the outsize growth, we're seeing it or digital business.
Wholesale and international.
Our wholesale business saw double digit growth again, this quarter with growth accelerating at each of our key wholesale partners.
We continued expansion of our international distribution in Q3.
We opened up 34, net new international points of distribution in the quarter and now have 260 international points of distribution 19 countries open in operated by RT franchise partners at quarter end.
Through our strategic partner Samir the number one children's apparel retailer in the China market.
I have 14 points of distribution opened in China.
Following the two new Q3 openings the TCB Brent has established presence in six of the top 10 cities in China.
We are beginning to anniversary a group of initial openings in China, and we're encouraged by the double digit comp growth, we're seeing at the handful of locations opened over a year.
I'll now provide an update on Q3 results and discuss our forward outlook.
Details for the quarter are as follows.
In the third quarter, we generated adjusted EPS of $3.03.
Which was at the high end of our guidance range of 2090 cents to 3005 cents.
Versus $3.07 last year.
Net sales were $525 million, which was below our guidance range of 530 million.
To $535 million.
That's up $2 million, 4.4% versus last years $523 million.
We returned to positive comparable sales growth in the quarter by recording an increase of zero point be persists.
It was below our initial guidance of a 3% to 4% increase.
US comps increased 1.2%.
In Canada comps decreased 2.8%.
You Commerce increased the stellar 23% with penetration increasing approximately 650 basis points to 35%.
Following a strong back to school season sales were impacted by warmer than anticipated whether that extend well into the quarter in key regions of the country.
As a result store traffic transactions and conversions all declined in the quarter with that you are as higher year on year.
Adjusted gross margin.
Adjusted gross margin decreased 130 basis points to 37.8% of sales from 39.1% in Q3 2018.
Driven by increased penetration of our ecommerce business, which operates at a lower gross margin rate.
As discussed last quarter, we had anticipated the gross margin decline.
Similar to Q2 s 150 basis points.
Adjusted EPS DNA.
Adjusted as being a was $117 million versus $122 million last year, and leveraged 110 basis points to 22.2% of sales.
I'm earlier as a result of a reduction in expenses associated with our transformation initiatives, along with lower incentive compensation.
Adjusted depreciation and amortization was approximately $18 million in the quarter.
Adjusted operating income for the quarter.
Was down approximately 2 billion.
40 basis points to 63 million or 12.1% of sales our adjusted tax rate of 23% was approximately 100 basis points higher than the 22% tax rate reported in last year's comp quarter.
Moving onto the balance sheet.
Our cash and short term investments for the quarter.
$66 million as compared to $93 million last year.
We ended the quarter with $184 million outstanding on our revolver.
Compared to $65 million last year.
The increase reflects funding to support the 76 million dollar jewelry acquisition.
And our shareholder capital return program.
We ended the quarter with inventories decreasing approximately 3% versus Q3 2018.
Our seasonal carryover inventory continues to be down double digits to last year.
Moving on to cash flow.
We generated $101 billion of operating cash flow in the first nine months of the year versus $83 million of operating cash flow for the comparable period a year ago.
Capital expenditures in the quarter were approximately $21 million.
We repurchased approximately $33 million of stock in the quarter and paid approximately $9 million in dividends.
Now let me take you through our updated outlook for fiscal Q4 2019 in fiscal 2019.
Q4 2019 outlook.
The company expects sales for the fourth quarter to be the range of $504 million to $509 billion.
He's done a mid single digit decrease in comparable retail sales versus Q4 2018.
Adjusted operating income is expected to be in the range of 6.1% to 6.8% of sales as compared to 4.1% and adjusted operating income in Q4 2018.
Primarily driven by stronger gross margins.
We anticipate fourth quarter adjusted net income per diluted share in the range of $1.48 to $1.68.
As compared to adjusted net income per diluted share of $1.10 in Q4 2018.
Our total inventories at the end of Q4 2019 are anticipated to be up high single digits versus Q4 2018.
Primarily due to the impact of or full spring delivery of jewelry product.
And strategically higher levels of basics merchandise associated with new marketing initiatives.
We successfully integrated radio a third party logistics provider into our logistics.
Just six network to assist with fulfillment of e-commerce them in beginning in Q4.
Which has dramatically improved our shipping times tomorrow.
Outlook for 2019.
For fiscal 2019.
The company expects sales to be in the range of $1.862 billion to $1.867 billion.
Based on an approximately 3% comparable sales decrease versus fiscal 2018.
We project ecommerce penetration was increased to approximately 31% of that sales.
Adjusted operating income this is expected to be in the range.
5.7% to 5.9% of sales as compared to 6.6% in adjusted rate in adjusted operating income in 2018.
We anticipate fiscal 2019, adjusted net income per diluted share will be in the range of $5 to $5.20.
Inclusive of 13 cents of adverse impact from the tariffs announced to date.
Versus our prior guidance of $5.40 to $5.75, which included eight cents of adverse impact from tariffs.
This compares to adjusted net income per diluted share of $6.75 in 2018.
We project a tax rate in the low twentys.
We expect to generate strong cash flow from operations in 2019.
Which will help fund our shareholder return program and capital expenditures.
We expect capex to be approximately 60 million to 65 million in 2019.
We ended Q3 with approximately $146 million remaining on our share repurchases.
Authorization and remain firmly committed to returning cash to shareholders.
At this point, we will open your call two questions.
Thank you at this time I would like to remind everyone. If you would like to ask a question. Please press Star then the number one on your telephone keypad. If your question has been answered and you wish to remove yourself from the Q press the pound key again to ask your question. Please press star one.
Our first question comes from the line up John Morris of D.A. Davidson.
Thanks, Good morning, everybody.
So Jane I hear you on the weakness that we've seen in September and October through working the third quarter, but now with the Q4 guide on comp.
Being as weak as it is what you know to what reasons would you see a persisting just trying to kind of understand why.
We're continuing to get those kinds of headwind so far if it's a ostensibly not so much whether in the current quarter. That's my first question. Thanks sure. When we look at our Q4 business quarter to date, there's a significant delta between our performance and our U.S. malls.
This is our performance in our U.S. outlet versus our performance online versus our performance in Canada. So if we break it down you know clearly online as a star continues to outperform and digital penetration continues each quarter to exceed our expectations.
But as far as the difference between our mall stores and our outlet stores, we're seeing a significant delta in traffic trends between the two brick and mortar channel versus what we've seen through the first three quarters of the year.
So our mall based traffic is trending significantly below outlet traffic quarter to date, which is leading to a pretty big disparity in topline trends in our mall stores versus our outright versus our outlet stores.
If you look at Canada, we're seeing a slightly positive comp trend quarter to date, so really what we're thinking of it during the November timeframe. It looks like our consumer shifted to off mall value retailers.
In a more pronounced way this year in order to take advantage of what has been widely reported as more of a month long Black Friday promotion Black November if you will.
Really moving off mall to take advantage of higher ticket promotion and we think that the.
The uptick if you will an outlet traffic and the big disparity from the first three quarters of the year and seeing these outlet channel turn on from a traffic and sales point of view is probably benefiting from the traffic that the a larger off mall players are driving through their promotional activity through the month in November .
And also like we said, they're strong focus on higher ticket and seasonal category, what we've heard so far in red at quarter to date. The mall based department store anchor, they're not driving nearly the same levels of traffic to traditional models.
Through November as the big box retailers have been able to do.
And then also as we sat on our last call later than normal Thanksgiving, We thought would impact November traffic and sales to the degree of about 5 million. So when you look at E. Com and you look at Canada, and you see those channels performing significantly different I think that supports that theory that we're seeing that traffic do not.
Number to really be heavily weighted towards off mall and so as we get closer to the holiday season, you know it's possible that the consumer shift their attention back to lower ticket value oriented categories, we'll know shortly.
Your next question comes from the lineups, Susan Anderson of B. Riley FBR.
Hi, Good morning, Thanks for taking my question and I was wondering if you could talk about the puts and takes as gross margin in the corridor I guess, how much of the decline was promotion versus shipping.
I guess, just curious to see what the opposite it to the lower easy thing getting and then on the delivery front I know there were issues last year, just curious if that's still happening in how the threepl is going so far for fourth quarter and if you're planning on getting any of those cost back from last year. Thanks.
Susan from a gross margin perspective, we were down a 130 basis points in the quarter to 37 eight.
Really driven by the increase.
Penetration of our E Commerce business.
We discussed last quarter that we had anticipated anticipated that margins with decline.
Pretty similar to the margin decline that we had Q2, which was 150 basis points.
Overall, we saw a merchandise margins were relatively flat in the quarter.
Store merchandise margins slightly higher than last year, driven by higher yours, and lower Ususally wins, we've been speaking about.
So the dilution really in the quarter was driven.
Really by the costs associated with e-commerce fulfillment.
Really as a result of that increase penetration to 35% of sales.
That along with additional fulfillment costs associated with expedited shipping that we incurred at the beginning of the quarter for our back to school season, where the main drivers behind the overall.
From a.
The Threepl perspective.
Really pleased to report that the radio integration has been well executed.
They are hitting their planned output, which is enabling us to really significantly reduce.
Days that the orders are in the DC.
We'll plan to ship over 4 million units with radio.
During this quarter. So also fell on the distribution.
Your next question comes from the line of Tiffany Kanaga of Deutsche Bank.
Hi, Thanks for taking my questions I know, there's still a big quarter ahead with the holiday season left to go but can you help to start to frame. The 2020 conversation with a better idea for how much comp reacceleration in margin recapture as possible in your view.
Especially in light of your guide down today with comps doctrines decelerating so sharply in the fourth quarter.
Our thought is we're going to wait and see how this holiday season plays out obviously, there's a lot of puts and takes associated with Ah.
With the quarter, obviously November as a compare to last years, though is our toughest compare.
And compares get easier as we move on so we're going to ingest.
Providing 2020 outlooks in our fourth quarter earnings call at this point really matters.
Your next question comes from the line of Paul Lashway of Citi Research.
Hey, Thanks, guys.
Maybe talk a high level about how to think about.
Managing the sales gross margin accretion that seems like currently we are focused on hire a large on color now the promotional environment should we think of that and strategy going forward can continue.
Competition remains promotional and then just curious what GAAP EPS would be for for Q and your expectations for free cash flow this year. Thanks.
You know, we look at a sales and gross margin and we try to balance.
You know both both components, obviously, we're continue to focus on our inventory management.
Which will bode well for us in Q4 this year.
Remember last year.
We concluded.
Margins, almost 300 basis points based upon.
The gymboree bankruptcy in our decision to accelerate.
US a sale of seasonal carryover inventory good news is coming into Q4.
We actually own significantly less goods than we did a year ago in terms of our holiday and pull seasonal basics roughly over 3 million units less than we did a year ago. So that that bulk of units that we had two.
Liquidity in the fourth quarter last year.
I don't anticipate that.
We will have any of those goods like that.
So it's really a balance overall in terms of sales and margin that you know the good news is we do expect margins to increase in the fourth quarter.
As far as SGN any goes we've been down in absolute dollars. Each the last two quarters and we're anticipating that decline will continue in Q4.
Okay.
Of this year.
Your next question comes from the lineup David Buckley of Bank of America.
Good morning, Thanks for taking our questions. The gene in the past few discuss how there's not a lot of loyalty from a customer in this industry just building on the prior question.
Balance raising prices, while also driving traffic and then just looking out your inventory guide the into the fourth quarter.
Planning first quarter comps last year had a similar rate as inventories you expect to end the year.
Thanks, I don't think we're going to talk about Q1 of next year as far as the loyalty Flash My price rewards private label credit card. We continue to see good growth in those programs. So I think from a loyalty perspective.
We've done a pretty good job you know over the past years.
Having our product and our offerings resonate with mom <unk>.
If you just come up a little bit from the conversation you know we've been share takers for almost a decade now while remaining net store closures and when you look back at Q3 that was really no different where one of the few kids retailers to comp positive and we picked up share in the third quarter and most of the kids retailers that we brought about.
I would have reported anywhere from negative low single digit comp to negative mid mid single digit negative comp for Q3 and for the most part are providing similar Q4 outlook I think when you think about the fact that on our mall based business is in and.
Hi, 30, right now after a lot of work on fleet optimization.
When you throw in E Com, our mall based businesses in the high Thirtys and when you think about what Mike said with a thousand lease activities in the next few years coming up and it digital business that continues to exceeded plan every quarter, there's a lot of flexibility within.
Within our hands and to look at doubts percentages and continue to drive.
That ecommerce percentage up continued to drive that off small percentage up and continue to drive that more percentage down you know, we've said that there's $12 billion of apparel sales from poorly positioned kids retailers that are rapidly consolidated and clothing and that implies the $600 million per year redistributed and as I said, it's bigger.
Setting.
We've been able to take good advantage of that redistribution for almost a decade and we see really no change to that we're seeing a change in Q in Q4 to date, we're seeing that they off mall players are able to drive a significant amount of traffic to their locations in the month of November through their promotions.
People are out there and they're buying hardgoods, and they're buying electronics, and they're buying televisions and they're not visiting the mall yet right now and so if that's what we have to do and we have to look at that for next year and we have to make some adjustments are more adjustment than we were thinking I'm, making to our mall based locations and you know driver E comm business up even further.
Other than those of the decisions will make but from a market share point of view, we have no intention of not continuing to gain market share and continue to focus on getting that profitability back and continue to get those margin levels back where they were pre denbury.
We have time for one more question. Your final question will come from the line of Jim Chartier Monness Crespi Hardt.
Thanks for taking my question.
There might last quarter, you addressed some social media complaints about your back to school sure thing you know How're you doing now we've continued to see some some complaints online.
But can you just talked about you know how your ecommerce shipping has been post back to school and then how to use of.
Radio by help them. Thanks.
Sure.
Obviously, we are we integrated with radio.
In the in the third quarter for holiday shipping in the fourth quarter.
It's been a very smooth integration, it's been well executed by both teams.
We're we're shipping our planned output.
From radio.
During this peak holiday period, and as I as I mentioned before we'll ship over 4 million units.
From the radio facility during the quarter.
You have seen a significant decrease.
These backlog.
Last year.
It was as high is.
Seven days after Black Black Friday, I'm happy to report right now, we're trending about a day and a half of backlog in our DC. So.
Surprised to hear that you're seeing.
Complained, Pennsylvania, because we haven't seen it.
We did have the back to school the Gulf.
It accelerated expedited shipping.
Bring it to meet RSL legs, we think we did about 99% of recitatives delivered within the period. So.
We believe that's all behind US now we have facility that's still ramping up that has.
Plenty of capacity left in the meantime were also utilizing some of our omni channel fulfillment capabilities, such as a ship from store, though to a much less.
Of an extent than we did the prior year, we have BOPUS buy online pickup the story and.
As for those individuals, but don't rush shipments so all in all we're very pleased with.
Fourth quarter distribution situation.
Thank you for joining us today, if you have further questions. Please call Investor Relations at 2014 or 536693, you may now disconnect your lines and have a wonderful day.