Q1 2020 Earnings Call
[music].
Greetings and welcome to the entire portfolio.
First quarter 2020 conference call.
At this time all participants are in listen only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance. During the conference. Please press star zero on your telephone keypad.
Please note that this conference is being recorded.
I'll now turn the conference call over to Russell Greenberg Executive Vice President and Chief Financial Officer, Oh, it's or portfolio. Thank you Mr. Greenberg you may begin.
Hi, Thank you operator.
Good morning, and welcome to our 2021st quarter Conference call.
It is obviously not business as usual.
What has happened since our last conference call on March 3rd.
It's been unlike anything any of us I've ever experienced or even imagined.
We see no need for me to read out the first quarter comparisons that were in the release, we issued yesterday afternoon.
I will devote my discussion to explanations that those results.
Onto the balance sheet and cash flow items.
John will then bring you up to date on how our business is fairing through the cobot 19 pandemic.
Where we see bright spots and opportunities, where we see weaknesses and key aspects of our plan of action.
As usual however, I must read the following this conference call may contain forward looking statements, which involve known and unknown risks uncertainties and other factors that may cause actual results to be materially different from projected results.
These factors include but are not limited to the risks and uncertainties discussed under the headings forward looking statements and risk factors in our annual report on form 10-K for the year ended December 31st 2019.
The quarterly report on form 10-Q for the first quarter ending March 31st.
2020.
And other reports we file from time to time with the Securities and Exchange Commission.
We do not intend to undertake no duty to update the information discussed.
One more recurring message when we refer to our European based operations.
We are primarily talking about sales of prestige fragrance products.
Conducted through I was 73% own French subsidiary and to perform essay.
When we discuss U.S. based operations, we are primarily referring to sales of prestige freight prestige fragrance products conducted through our wholly own domestic subsidiaries.
Our consolidated first quarter gross margin of 61.5% of net sales was just 10 basis points off of last year's first quarter.
Once again, the strong U.S. dollar had a positive effect on our gross profit margin for European operations, which rose 70 basis points to 63.9% as compared to 63.2% from last year's first quarter.
For U.S. operations gross profit margin was 52.6%.
Compared to 55.1% with the decline related to product mix in particular.
Suite product sales decline declined sharply in January and February as China close down.
This brand is a best seller in Asia, or overall and in China in particular.
And the gross margins on Anna Sui product sales are among the highest <unk> our portfolio of brands.
As I turn the discussion to expenses.
Please keep in mind that our entire operational budget for the first quarter was based on our originally projected annual sales of 742 million.
And as we discussed on our last conference call.
Our sales in January and February with the exception of China were pretty good.
But when sales practically ground to halt in March.
Our advertising and promotion campaigns were underway.
And there was nothing we could do to recover those expenses.
So for the first quarter promotion and advertising included in <unk> 's DNA expenses approximated, 19.7% of net sales compared to 15.4% in last year's first quarter.
In a typical year, we budget around 21% of net sales for advertising and promotion.
With the fourth quarter accounting for the largest percentage.
This is not a typical year.
And with new product launches postponed you can expect a decline through advertising and promotion in dollars as well as as a percentage of net sales in future quarters. This year.
[noise] for European operations, SGN, a expenses declined 6.4%.
And represented 50.1% and 42.5% of 2020 and 2019 first quarter sales respectively.
Well U.S. operations, where sales dropped 10.9% comparable quarter SGN, a expenses decreased 8.8% and.
And represented 45.8 and 44.7% of net sales in 2020 and 2019.
The first quarter story is one of significant erosion from the positive leverage that we've seen over the last couple of years.
As the lost a fixed cost absorption.
Produced the steep decline in our operating income and margin.
We are looking for an even greater decline in the second quarter sales as compared to last year's second quarter.
We have been able to rein in some advertising and promotion expenses.
And of course travel and non essential expenses have been severely cut.
But lost the fixed cost absorption is expected to continue.
We are looking for some improvement as the year unfolds, but until we see from product orders.
It is impossible to quantify.
You probably saw that below the operating income line was 954000 dollar gain on foreign currency as compared to a 151000 loss in last year's first quarter.
Also our effective tax rate was 29% and 27.4%.
For the current and prior years first quarter.
With the European rate, dropping one percentage point and the U.S. rate, increasing I'm sorry decreasing.
I'm sorry, increasing from 12.1 to 20.9 in last year's first quarter tax benefits from the exercise of stock options significantly lowered our U.S. tax rate.
One of the points John made on our last conference call Bears repeating.
When the can vona Corona virus was first identified we were worried about the supply of certain components coming from China.
But because of tariffs impose last year, we had already identified alternative sourcing.
At this point, we not only have alternative sources, but the Chinese factories, we buy from a pretty much operational.
On a related subject you will see that our inventories at March 31st a relatively unchanged from year end.
Where there was little if anything being reported about cobot 19.
At year end, our inventory levels were built to support 2020, new product launches.
Well with the exception of coach Dreams, which debuted in January most of all major launches have been pushed into 2021.
As a result, even though we have worked closely with our vendors to push out inventory purchases, where possible, we anticipate that inventory levels will increase in the coming quarters.
If there ever was a time for a strong balance sheet. It is now.
We closed the first quarter with working capital of 386 million.
Including approximately 204 million in cash cash equivalents in short term investments.
We are working capital ratio of over 3.7 to one.
And only 9.8 million of long term debt.
We also have 47 million in untapped credit facilities.
Finally, as previously reported we temporarily suspended our quarterly cash dividend saving us approximately 10.4 million per quarter.
Now I will turn the call over to Sean for a closer look at how we're doing what we are doing and our expectations John.
Yes, Thank you Ross and good morning, everyone.
Well I won't repeat most of the bonds. We raised you know <unk>.
And form 10-Q filed yesterday I do think that you exceptional performance of goods dreams and guess legacy products.
Oh, well see of a special mention.
I also think that varies value in pointing out silverton fundamentals of our business model.
Which distinguishes into <unk> from some of it Spears and immunized us against some of the harshest effects of just doesn't make.
Let's look at them.
Firstly, we are not capital intensive.
We don't own factories, we don't operate stalls, Iowa, two dozen twentys capex budget.
<unk> $4 million.
We have 400 full time employees worldwide.
Not thousands.
And approximately two filled although expenses a viable and I will need to fixed expense should come in under 25 million Dakota.
So we've always maintained an exceptionally strong balance sheet. So we don't need to raise money no higher than most people at present no into future to grow our business.
Why do we have instituted the hiring freeze we have not so Lord knows no discharge I well employees and although we have not get any salaries. We haven't lets you fight off stuff that we will eliminate 2020 burn uses.
Moving on to our markets as noted in the school. So the impact of coffee 19 was most CV here in the Middle East Asia, now well that says decline for us 44% in the middle East and 37% Michelle respectively for <unk>.
North America on Western Europe, where should that in place in store closing were implemented literally the period fill spoke to and that says declined only 1% in North America and 11% in Western Europe.
The wells yet of March and into a pre 2020 Nols on top of Asia has reopened we've chosen not taking the lead and South Korea and Taiwan following.
We've seen that business some business bounced back as noted one of our best sitting brands in Asia is on a sweet and overruns says that treated with pool in January and February.
March brand says a treat did we have revived doing good BAFTA equaled enough says and these trends appear to be continuing.
Hi, there to date, Japan, Australia and markets in Southeast Asia, Australia, the Compton unsafe and most retail outlets remained closed.
I will also need it since for the month of it fit well down significantly.
Yes, there has been an improvement in China, but said in Western Europe, and North America, two largest markets continue to finish the effects of the funding.
Much of Western Europe has recently.
Reopened like Jim and very recently, Austria, and not eat that we've all this plan fall it till the smoke fronts open just some stalls yesterday.
Civil U.S. States have also begin to we stopped with more coming on board in two weeks and months ahead. So things are moving into right direction also in the Middle East Weve shopping malls is beginning to reopen hi, though business in the UK very important markets for Us Rochelle.
And travel retail a distance too so as Russ noted earlier sick unquote <unk> second quarter says we'd be down significantly.
With regard to retail the reopening of Rican most of stores has been gradual process is complex and the regulations and you feel by country and Luca.
General stores, most effectively deal with a number of issues, including signage sanitation stuff between monitoring Muskal statistics and for me consumers and the meeting also the concentration of customers. Some have imposed <unk> pickup which is not conduct season two fragrance.
Touches.
Even with economies opening our expectations are restrained and quite frankly.
We expect you still demand for fragrance due to be a considerably less than last year. Moreover, while online says have increased it still supposing online says.
I'm really rely on self Bustees like Department store suspicion is still a mizuno I'd bubble reserve in our own you come inside Nonetheless, well looking beyond two dozen prince.
Our business development team as they build to devote more time to exploring Brent acquisition, but so far nothing Phil to rebuild.
So before the king or your questions. One thing is a lot less and I want to extend our appreciation to all of our employees as well as our suppliers of distributors around the globe. Following a fault during this unprecedented periods so no bread.
You can open the floor for questions well, that's a nice we'll be glad to answer.
Thank you.
Ladies and gentlemen at this time, we will conduct our question answer session. If he would like to ask a question. Please press star one on your telephone keypad a confirmation toma indicate your line is in the question Q you May Press Star too if you would like to remove your question from the Q4 participants using speaker equipment and maybe not.
Sorry to pick up or handset before pressing the star keys.
My first question comes from Joe Altobello with Raymond James Please state your question.
Hey, guys good morning.
Hi, Joe Hi.
In terms of a easier particular, north Asia, where you're starting to see markets open up you make in Korea, China. For example, curious what trends you're seeing at April a in brick and mortar retail.
Market or art is traffic starting to come back its it started to get it up year over year or is it just up sequentially from.
Where it wasn't.
<unk>.
Oh, Okay. This is something that tell you follow carefully.
The traffic in brick and mortar stalled out down sequence.
These you're comparing to last you.
Even in the month of a pool of the traffic he's done, but I expect for something like 50%, but oh, well business was up because of or because of income.
And the frequency of the thought of E Comm no <unk> in China for instance.
So free goods, he's a to do much you'd be given the so because most of stores. So we see I think we continued to see says.
Up.
<unk> you called <unk>.
Which we live balance the fact that to the traffic and the says at a brick and mortar still <unk> down.
Exactly.
Thank you Walt I can odd because I'm. Following this on a weekly basis I get three books or what.
China is a big began a new mall that everybody, who can got but as you know a forced korea. He's a very important marquette and because there's no trouble all the very strong duty free.
Business it to be had in Korea special you.
Serving the Chinese customer troubling is absolutely the down to zero.
When he's going to reopen disease, a bigger question Mark.
But to in what that's going to Ted you.
Japan, those stores closed or so.
So that's what I can tell you felt for enough <unk> Asia, but they can you I mean shovels. Her question I can give you a more precise indications or by countries or the Europe et cetera, but.
No that's yet you should needs unbelievable.
That's helpful. I just wanted to follow up at that makes in travel retail obviously, a second gives me a packet for the people future and seeing a little bit of an uptick once it gets an up tick in E. Commerce, if you could size for us.
Last year, how big travel retail was from a sales and earnings perspective, and how big ecommerce was for you guys.
[noise], Oh, let's talk about ER the duty free.
Business.
I have to do that we have reduced drastically our projections for the full who travel retail or agenda of the though I expect to have this business to presents maybe 5% to 7% of our business where last year. It was Oh, we still most 20.
Suntrust Lester travel retail between 15 to 20, absolutely division. So this is really where are we going that we're going to feel the most have been full effect because of all asphalt Oh, I mean or.
Well its operatives of Oh, Gee freeze awful close to a we think the trust seek he's gonna be weighed down we see equals m. days or so.
A problem of of the exposure of receivables with Oprah <unk> not the deals a yet so you don't want to get to two even more crowded so really the trouble retails for <unk> is maybe the most affected a we'd be them.
Stuff like that but oh, the business or the offer her territories you up for U.S.
We stopped a recouping we think a are you know what projections, we have starting in the month of June or July and August.
We have as Russ said, we have maintained a good amount of inventory of high yeah <unk> of inventory that we need a focus says its wheel hubs show, but in case, the market's rebounded a the buckets rebounded.
First of and the then we expect a we will have invent <unk> you just the inventory to respond.
It does it become attractive revenue.
Oh, Yes, you want one silicom.
E Com Joe is as I, usually as I, usually say is a little bit more difficult to to quantify because of the fact that many of our brick and mortar customers also have an E. Com section and we were we we get some indications, but we don't know precisely how much of their business is actually done through.
Through E Commerce.
In China, and Asia, it's a little bit different because John I think I, what does it close to 70% of the sales in China or through E com.
Yes, well were well aware hoodies you put together the Macy's dot com because they saw the outcome, but that doesn't come. So all this stepped up these you come up for us it's less than the 5% of our business today.
Okay.
Thank you guys appreciate it.
Britain pleasure.
Thank you. Our next question comes from Linda Bolton Weiser with D.A. Davidson. Please state your question.
[laughter].
Hi, how are you.
Very good and you don't get good thank you.
So in terms of your comment about fixed cost being less than 25 million per quarter is that on the I've seen a line alone or is that including some costs that are in Cogs as well and can you comment on how permanent those reductions would be I mean, obviously the.
Bonus reduction would come back later, but can you just comment on sort of if any of this wouldn't be more permanent.
[noise] well the a first of all there is a little bit a in Cogs, but it's almost a inconsequential.
The only thing that's in Cogs that as a fixed expense is a is your amortization and depreciation on tooling.
For the for molds that we create for bottles caps in college and things of that sort. So most of what we're talking about with respect to this 25 million isn't the S. DNA.
And when we came up with the number is really where we're looking at it as to what we expect in the near term.
What we've done with respect to the fixed costs.
As John mentioned, we we did not for a low any employees. We only have 400 people. We do it took us a long time to build the team that we have the last thing we really want to do is to lose some of the great talent that we have a once this pandemic is is over a we really.
We do expect things to get somewhat back to normal and we would want to have this this this great team that we have so it's a that's what do you less than 25 million as a short term number of what we're expecting over at least the next two three quarters.
As we as we move through this this pandemic.
And then.
You commented on you know.
Like a down 50% number for retail store traffic so would it be safe to say that the second quarter revenue is gonna be down at least 50% I mean, when you take into account all the travel retail decline and everything is that kind of the magnitude that you're looking at maybe for the second quarter.
Hi, John John mentioned, the 50% I'd go and John Correct Me, if I'm wrong, because I don't want to put words in your mouth. I think you were talking about the brick and mortar retail in China.
Hi, [laughter] brick and return in Malta in China, where when's the stores open it was down 50%, but let's not forget but in the month of April all the stores. Besides.
China, all the stores worldwide, where close yeah, so I'm not thinking about 60% about thinking about 100% and we didn't to.
We've done a drink together, we decided not to give guidance, but lets realize that in the U.S. For instance, there was a would you done to send it to a new ideas and new products in the month of April.
And he sees a because all the stores all I woke us the mills were closed a <unk>.
Again. This was you know well be switching that we'll have a projections when we read our projections in miles from the rest of you would you don't expect we didn't expect to says you need fully too it's going to be.
Little bit due in may.
Already we seeing that to June we'd be of course, but so it's going to abuse.
Costa off a very unusual quarter of.
Yeah, and we then we can't make any projections because of the visibility you really isn't there not only do we not know when a different states within the United States might open up but certain countries around or other countries around the world and then you also don't know what the acceptance rate of these.
Stores opening is going to be a and that's the reason we don't have Ah. We don't have the ability we don't have the visibility to actually put out any projections.
But honestly in a in a in the second quarter, a we expect that to be the worst quarter.
Clearly without a with or without a doubt.
Thank you that's helpful and then.
Can I just ask you in terms of the cutting of the dividend, what K P eyes or metrics or financial numbers or what would trigger your thoughts to bring back the dividend like what what kinda condition would you want to see the business and to bring back the dividend.
Ah honestly, it's a very good question because I ask my sense is question because as you know me and if you'd like but no. We received the 45% to 50% of be done so when the when do we think but it wouldn't be time to do to go back to either.
It's important to have better visibility too.
Two dozen 21, so when the when I seem to company would be the we'd have a bit to filling of how to two dozen 21 is going to be when we're going to be back to normal comprising a of says Oh no more the type of profits are we defended.
Well go back to would you be done.
Again would you be that's what's not too much a cash flow thing because oh, we have Oh, I think 200 million the Dol lose on the.
Again.
But but we think that a it was a it was not try to do it was bit of two to hold it again.
If we off too conservative if we do you sort of business come back festive and what we think it's very easy to two to reactivate too, but you didn't unless you want to comment on that.
Yeah, I mean, the only thing out I would add is that when the board met to discuss a a lot of it what really went around the a the cash flow issue.
Right and as soon as we have things get back somewhat.
Well, we can where we have the visibility we need and our projections show that we have a positive cash flow I think the company will revisit the dividend.
Yeah.
Okay. Thanks.
Thanks, very much and good luck with everything.
Thank you Linda Thank you you too though.
Thank you and next question comes from Wendy Nicholson with Citigroup. Please state your question.
Hi, good morning.
A couple questions first just following up on the online business because it's all going through third parties and you don't have to manage any of that so tell me yourself is it fair to say that was done margin of online sales is neutral to traditional brick and mortar sales no advantage or disadvantage.
I agree with that right absolute ups absolutely absolutely.
Second thing Italy.
Totally new to okay on their call yesterday, Cody talked about on some customers.
You know they didn't call, which customers much like the train, but some customers and that you need space or having trouble and paying their bills and sell receivables have gone up kinda corner and I'm wondering if you have any issues. I know you said you don't have any liquidity issues, but right are you have any having any challenges on the receivable side.
We are we are working very closely with a pretty much a pretty much all of our customers because everybody is trying to push things out as much as they can do to the due to you know the their own cash flow issues. The only area, though where we have seen a little.
I did have a collection issue a as John mentioned is in the is in the travel retail.
Some of these duty some of the duty free operators and the airlines.
Are suffering significantly.
Their doors are completely closed and we're getting some pushback on on some collection efforts, but honestly for the most part we're working very closely with a with all of our customers.
Some of them are on payment plans.
There are a couple of of retailers that that of course are ours are sketchy with respect to the possibility of bankruptcy.
But none of the major customers that we deal with.
Have filed bankruptcy at this time.
Got it and I would like to add the if I mean, if I may like thread that are either from from a a operations in various all in the in New York.
Most though 99% up by way of receivables.
Carville by your insurance.
So we have a week.
We like close of said the we see may be some weakness with one or two or travel retail operate though but as a risk. He's a in hundreds of thousands of makes you know certain absolutely not yeah. Yeah. So we have absolutely no increase that well reserves.
<unk>, but that all things like that but that's true, but oh low teams you up in the U.S.
In a in Asia.
Oh, Hey, being good finance department to other to collect and I think its <unk> they'll doing quite quite well because of the collection rate he's actually are better than a little bit of unexpected its previously.
Got it that's great.
My last question and thank you so much hurry letting me after a couple.
On the push out on your new product, which makes total sense. You know. The then you launch has I guess the question is you know is there on inventory sitting there do you have follow up her team that you thought you'd be shipping that now you're not is there any read them sort of inventory obsolescence or any consideration.
They are on in terms of you know impact and that was delayed launch. Thanks.
Yeah. Thank you. It's a very good question because it is also something where the whole company as spends a tremendous amount of time. So number one the good news is that we fragrance weve perfume, we don't have issues visa seasons that weve size, we call lose a as opposed to government.
Well since so as a product that done producing good today, you will be the same small from one year ended uses them.
Then the one they produced a three years ago.
So, yes, we have difficulty or little bit more inventory than we would like but again.
As we review or on the Mone feel quarterly.
Well in advance we we have not increased a tool the reserve for Oh, absolutely sons.
Due to having more inventories and the businesses he to buy the situation.
Well she wants to add something.
The only thing I would say just on your last comment is that in our industry because of the fact that you don't really have an issue with respect to Ah longevity, it's very rare to actually have a write down with respect to finished product.
Even if you discontinue something.
You can always find a market, where you're going to sell it where you can at least recoup your costs remember our margins are extremely high so the idea it would be to at least recoup the cost of the of the product.
So inventory obsolescence is not something that's very significant.
In our business.
I mean, so my goal to Oh.
Yeah, and I would continue.
And the ER in Verizon in New York, we have been able to push out the millions of dollars of deliveries of components.
So yes to Dave I think at the end of March I, well inventory level was the same as it was a december 31st.
But it's going to increase a little bit more in the second quarter, though just because we don't have the says it's a bits we expected and let's not forget that we buy we place I will touches all those of components.
<unk> to seven months or in advance of did easily so of course. So today, we have too much but oh, we think that agenda <unk> and differently agenda of fourth quarter, though would be back to a two something good but he's a very acceptable.
Got it.
No.
Thanks Wendy.
Our next question comes from Steph Wissink with Jefferies. Please state your question.
Hi, Good morning, everyone I might just got a few follow ups. The first maybe right for you.
Apologies, but the background I like minimum if you have any sort of agreement that would strike some sort of minimum guaranteed.
Oh, yes or were they many of our licenses or do have a certain minimum guarantees. However, the good news is that we had been working with each and every one.
Of our licensees pretty much from the from the day. This pandemic first came to a into into Oh.
In into existence.
And in many cases, we have already received.
Modifications of the license agreement our goal is basically two to modify these agreements where we we pay based upon actual sales.
And in most cases, so far where we where we are have negotiated we've been able to work with our partners and ER and alleviate the strain of the minimum guarantees.
Yes.
Very helpful. Okay. Second question is just with respect to M&A you think about the post crisis period are you seeing anything even now around brands that might be.
He loosened up in some portfolios that could be interesting for you to take on.
[noise], we were we've been working on on quite a few different things a prior to the pandemic coming are coming out I think the fact is that right now everybody is in a basically survival mode or this pandemic has affected at all but just.
Every single industry, certainly any of the companies that would be potential license doors are also severely affected so everybody kind of isn't there a survival mode doing what they need to do to run their business to maintain their businesses to prepare themselves for for the post pandemic.
Oh opportunities. So I think that many of the things that we were working on will resurface once things get a little bit back to normal.
We really haven't been pursuing anything or anything brand new during their spend dynamic I think our our efforts have really been concentrated on on business at hand, Sean do you want to add anything.
No I think that just before the pandemic were up soon pursuing a couple of interesting.
Brands with we'd like to add to our portfolio and the conversations with zynga into right direction, but again or the last two months or you can be.
I don't think it's time to go back to two he's gonna efficient people Oh, a busy protecting their business got pizza, but definitely the next to the next week's a month or really go back two or two to the table and took two different.
Very interesting Gibbs <unk> bruns, but we can add to two for stable.
Great and then just a final housekeeping I think I wrote it down but right now and that you said your E commerce business in China is bigger than bricks and mortar.
The fat interactive.
Yes and times.
Three times bigger.
And has that been the case, even pre crisis or is that or what you're seeing currently enrichment.
You'd stop it started really a fault for us and stuff to drill yield moves to you I don't know how to go.
When we do you ever loved the sort of programs. These are two more than the.
G.D.. So we have very strong good distribution in China or again.
Some of our brands like and thus we are a lot of or even the coach our well recognized a in a in China or and that's why we are well able to have such a nice become business.
Great. Thank you very much.
Thanks you.
Your next question comes from Hum at horse on with B.W. as financial please state your question.
Hi, So first off is that the pushed out in product releases and 20.
2021, a delay your plans for any previously planned releases and 2021.
Right.
Well, what we work we work with each of the brands, we work with a calendar.
Have a of product launches. So so I I think the answer would be yes, if we launched a a master new fit a fragrance family in 2020, we would have gone with the flanker for that family and 21, if we've moved the launch out the idea would be you're going.
To launch your your your new pillar.
In 2021, it would be silly to launch a flanker simultaneously with it.
So theoretically your calendar moves out by the six month delay or seven months delay.
You know, it's it's just as if 2020 I didnt exist I mean, that's kind of how we're really approaching it.
It's a rebuilding stage are based upon something that that came to us for so unexpectedly.
Okay, and how is channel inventory ahead of plan reopening eating their there'll be a significant delay as far as a restocking is concerned.
I'm, sorry, I didn't hear the beginning of a sentence other question.
Oh about how is that a channel inventory.
Yeah. There's no question is with respect to channel inventory or when do we think that we're going to start seeing a restocking I think we're also in a situation that many of these retail locations close rather suddenly.
So there is there is an existing inventory that is in the channel I think it's really going to depend on how are the customer how acceptable the experiences for the customer.
To come back to the retail channels, and ER and to see where they where the demand is.
And at that point, then you'll then you'll get to restocking, but right now I think that there's plenty of product in the channels I. It's just that the stores a closed and there's nothing being so.
Okay last question, even channel if any if I mean, if it yet, but I I totally agree with you or Russ because oh the stores closed the abruptly so and there was inventory in the stores, but are we are money to a very carefully.
Inventory at a wholesale level at a at the real distributors.
And agents and ER and there are very inventory is not a high and that's one of the result, so that's well able to collect eyewear receivable ER so when.
Yeah, not although stuff so I don't see if it they will they would reorder immediately as vis a vis vis the open I still this topic, but it means that the the mournful of two left a the stores open we will see a real deals for my will distributors.
Okay, and then are you planning a changes to your go to market strategy are you going to spend more time online for the online sales instead of retail.
Gross.
We [laughter] it's interesting. It's a good question. We we are experimenting with a lot of different online opportunities you know simultaneously, we're working probably with a three or four different online venues if you.
Well to see how we can increase our presence a with respect to E. Commerce. If that is a platform that is a strategy that the company is pursuing but we are still at the very early stages.
Okay, great. Thank you.
Okay.
Thank you, ladies and gentlemen, there no further questions at this time I'll turn it back to management for closing remarks.
Great. Thank you and thank you all.
For joining in turn todays conference call as usual if you have further questions I'm. Please contact me by email and I will do my best to get back to you.
Please be safe and stay healthy and have a great day.
[music].
This concludes today's conference all parties may disconnect have a good day.