Q1 2021 Earnings Call
Question and answer session at that time it the other question, but the one oh by the foreign your telephone.
Ill say that anytime during the scope and you need to reach an operator 'cause star zero.
As a reminder, today's conference is being recorded on Tuesday May 26 2020.
It's my pleasure to turned the Gulf it's over to Jason The tell director of Finance and Investor Relations. Please go ahead Sir.
Good morning, Thank you for joining hibbett sports to review the Companys financial and operating results for the first quarter fiscal year 2021, which ended on May 2nd 2020, before we begin I'd like to remind everyone that management's comments. During this conference call, which are not based on historical facts, including those in response to your questions are forward looking stay.
These statements, which reflect the company's current views with respect to future events and financial performance are made and reliance on the safe Harbor provisions of the private Securities Litigation Reform Act of 1995 and are subject to uncertainties and risks. It should be noted that the company's future results may differ materially from those anticipated into.
Skus in the forward looking statements some of the factors that could cause or contribute to such differences have been described in the news release issued this morning, the company's annual report on form 10-K, and and other filings with the Securities and Exchange Commission. We refer you to those sources for more information lastly, I'd like to point out that management's remarks during this conference call.
All are based on information and understandings believed accurate as of today's date May 26, 2020, because of the time sensitive nature of this information. It is the policy of Hibbett sports to limit. The archive replay of this conference call webcast to a period of 30 days.
Participants on this call, our Mike Longo, President and Chief Executive Officer, Bob Bulky Senior Vice President and Chief Financial Officer, Jared Briskin, Senior Vice President and Chief merchant and Ben Knighton, <unk> Senior Vice President of operations I'd now like to turn the call over to Mike long ago.
Thank you, Jason and good morning, everyone.
Before I begin I'd like to start by acknowledging the impact of Cobot 19 on our communities are.
We know that many people are significantly affected by this healthcare crisis, and whether that effect is physical or economic our thoughts are with them and we're doing what we can to assist.
At the same time, we want to give our thanks to our employees whether in the store the distribution centers or in the store support center or people have maintained their high level of customer service in this very challenging environment.
The team came together worked through the problems and delivered what we believe is are very good results given the situation.
Our focus for the quarter centered on on the results in five key areas safety stores sales inventory and cash with regard to safety.
We have a very sharp focus on customer safety and employee safety because of our efforts. We have store associates are happy to return to work and serve our customers and at the same time customers, who are happy to shopping our stores as well as on our digital platform. This in turn delivers the results are owners expect so with regard.
The stores during the quarter, our stores were opened around 60% of the time.
At the end of the quarter, we had 690 stores fully open to the public and increasing every day and as of today, we have over 1000 doors open to the public.
With regard to sales prior to mid March we were experiencing accelerating comps in both the stores and online.
Well the emergence of the virus our sales fell dramatically though.
Reaction, we pivoted to support the digital business by allocating more product and emphasizing our ability to fulfill from our stores at the same time, we increased our marketing of the digital business.
These efforts were rewarded with a 110% growth and E commerce sales in Q1.
And the Q2 sales continue to be strong.
At the same time, we continued to operate stores as allowed by state and local authorities. We believe that this was a critical decision that allowed us to maintain employment for a great number of our people. Additionally, we took steps to help our store employees with additional paid time off guaranteed hours payment of medical benefit.
Amongst other things.
Connection with our people was important and then to help them financially and helped us maintain contact with them.
And our people showed their appreciation for these actions when we reopened stores by showing up in delivering their trademark service to our customers. We've had no issue staffing our stores to service our customers.
Combining this with our digital business allowed us to continue to turn through product and manage our inventory.
As you saw in the earnings release, a total sales comp for the quarter was a negative 19% the brick and mortar comps were a negative 34. However at the end of quarter those comps turn positive even though only a portion of the stores were opened at that time.
For the total quarter, our digital business was up 110% continues to be strong.
Early in Q2, as I said earlier with regard to inventory our inventory position is actually down versus last year and this was the result of maintaining sales and the intense management of the inventory flow by our merchant team working closely with our vendor partners Jared while outlined some of his those actions in greater detail.
In a moment and finally, our focus on cash also paid off during the quarter, we used approximately $10 million in cash compared to the end of the year.
And to give you a little more detail about cash and some of the other results I'll be followed by Bob bulky and as mentioned Bob as our new Chief Financial Officer. His first day on the job was in the middle of the crisis. So there's a pretty unique perspective on how all this play that played out Bob welcome to the team if you will give or want to.
A quick bio and yourself before we begin.
Thanks, Mike and good morning, everyone as a new member of the Hibbett Sports management team here is a little bit on my background. After graduating from Indiana University with an accounting degree I joined the public accounting firm of Arthur Anderson in Milwaukee, Wisconsin, and then held various accounting management roles over 15, plus year period in the manufacturing technology and publishing industries.
I was spent the last 13 years and positions of increasing leadership responsibility within the retail sector, including 11 years of tractor supply a fortune 500 company Nashville, Tennessee or rose to the level of Vice President controller, and most recently a fleet farm and Appleton, Wisconsin private equity backed retailer, where I was the corporate controller and interim CFO.
My first six week period, Hibbett have certainly been interesting, but I've been impressed by the way. This organization has responded to the challenges presented by the Cobot 19 pandemic I'm, even more excited about the future of the organization.
I will turn our attention to the first quarter results as a reminder, we treat city gear as an extension of the hibbett business and the results will be reported on a combined basis also city gear is included in our consolidated comp sales figures as we now have owned the Citi your business for more than one year.
For the first quarter total net sales declined 21.4%, the 269.8 million and overall comp sales declined 19.5% compared to last year's first quarter increase of 5.1%. Despite the fact that our store population only operate for about 60% of the available days during the quarter.
While the closure to varying degrees of our retail locations during March and April had a significant negative impact on our comparable sales during the first quarter, we experienced an acceleration of sales toward the end of April. So thats continued into may this acceleration coincides with the reopening of our stores and we've seen very strong comp sales results. During this period.
We also continued to fulfill E commerce orders were allowed by our landlords and local municipalities. As a result, we had E commerce sales growth of 110.5% compared to last year ecommerce sales represented just over 22% of total net sales during the first quarter.
Our GAAP gross margin declined approximately 700 basis points compared to the prior year, primarily attributable to the larger representation of lower margin ecommerce sales during the quarter. The gross margin was also impacted by a $5.1 million increase in our lower of cost or market inventory reserve as a percentage of the aged inventory increased.
Due to the cobot 19 related store closures. Excluding this charge adjusted non-GAAP gross margin decreased approximately 540 basis points from prior years first quarter.
FG and expenses plus goodwill impairment represented 33.1% of net sales in the first quarter. This increase of 1154 basis points was primarily due to the noncash impairments of the Citi. Your trade name in the amount of $8.9 million and goodwill in the amount of 19.7 million. These two items were partially offset by reduction of.
$11 million in the second year earn out liability related to the Citi. Your acquisition I want to be clear that these adjustments were triggered by our certain significant market value decreased and the business performance uncertainty in mid April. These adjustments are based on financial projections made at that point in time, although the adjustments to trade name and goodwill.
Our not subject to reversal in future periods, the projected earn out liability for the second tier of the Citi. Your deal is dependent on future projections of Citi gears EBITDA achievement as defined in the purchase agreement.
Excluding non-GAAP items adjusted EPS gene as percent of sales increased approximately 280 basis points over the prior year. This increase resulted mainly from incremental ecommerce expenses as we drove more customers to our website during the second half of the quarter.
Depreciation and amortization declined approximately $350000 due to the store closures in fiscal 2020 as part of the company's strategic alignment plan. The income tax rate for the quarter was 31.2% compared to last year's rate of 25.3%.
On a GAAP basis, hibbett generated a $22.1 million operating loss, which compares to last year's operating income of 37.3 million, excluding all non-GAAP adjustments for the quarter. Adjusted operating income was 7.8 million or 2.9% of sales GAAP loss per share was 92 cents, excluding the impact of the non-GAAP.
Items adjusted diluted or diluted earnings per share was 31 cents.
Turn to the balance sheet.
The company ended the quarter was $106.2 million and cash versus 66.1 million at the end of fiscal 2020, and a 117 million at the end of our fiscal first quarter a year ago as detailed in our recent 10-K, we borrowed 50 million in March under our unsecured credit facilities with regions Bank and bank of America as it precautionary measure to increase our.
Cash position and preserve financial flexibility, we continue to have $50 million outstanding under our new secured credit facility with the regions Bank that has maturity date of April 19th 2021.
To reiterate a comment Mike made earlier, our net cash burn during the quarter net of the depth previously discussed was about $10 million. This 10 million breaks down into a positive cash flow from operations of 3.9 million offset by capital expenditures and share repurchases that I will discuss in a minute our cash position was further protected during the quarter by willing.
Thats of our vendor partners, both merchandise and non merchandise to provide us with either extended payment terms or installment payment options as of this week. We are once again substantially current with amounts owed to our merchandise and on merchandise vendors with the cash we have on hand today, a majority of our stores opened to the public and increased momentum and.
Sales over the past month, we feel our current liquidity position is strong.
Inventory declined 2.6% from last year's fiscal first quarter, we were able to manage their inventory well during this difficult environment as our aged inventory defined as more than six months past. The date of receipt was 20, 21.9% at the end of the quarter. This is up from 16.8% at the end of the fourth quarter fiscal 2020.
Compares to 20.5% in the same quarter one year ago.
We spent 4.1 million on capital expenditures during the first quarter as we focused on our most important capital needs. This included opening three new stores rebranding to hibbett stores to city gear and moving forward with other impactful.
Operational initiatives the company purchased approximately 428000 shares for totaled $9.7 million during the first period of the quarter under our share repurchase program. All shares were purchased under a tenbfive. One plan that was approved prior to the cobot 19 pandemic, we have just over 143 million of remaining.
Authorization through January 29, 2022 for future share repurchases at management's discretion I'll now turn the call over to Jarrett for review of merchandising. Thank you bye.
Welcome to the team.
We're very confident that our plan for the first quarter as many of our initiatives were inflated showing positive results prior to mid March and the effects of greater than 90 in apparel. Our momentum was strong as the team is intense focus on sharpening the connectivity in our apparel assortment to sneakers was resonating.
Men's apparel was having significant growth and we saw a return to growth in women's and kids apparel at the time seasonal apparel was well under control and carryover of is limited and accessories, a renewed selling focus combined with vendor funded specialty contests, we're driving the category to positive results our strategy change in licensed products divesting through fan.
Based merchandise and investing in connectivity to our sneaker business, we're showing significant acceleration.
But where results were positive across all genders, and we're excited to capitalize on our strong lowest calendar for the balance.
Women's footwear was a key investment area for us and was performing exceptionally well.
In mid March we had a pivot due to the code that 19 virus. Our response to coded was based on three phases prices recovery and the new normal our vendor partners were incredible collaborating with us on our approach to our three phase plan. This collaboration and partnership occur daily in many cases hourly.
The support we received from our vendor partners is a testament to the trust that they had in us and in our business model. We are beyond grateful with regard to the crisis phase in collaboration with our partners. We limited incoming deliveries reduced the future order book Reflow, the future order book and extended payment terms, our merchandising is intense focus.
On inventory management allowed us to exit the crisis phase with inventory below prior year levels and with age levels under control.
Beyond proud of our team for their relentless effort and execution during this time.
With regard to recovery, we're seeing strong acceleration of the trends we received pre coated we've been able to increase the flow of new receipts to capitalize on the current business and we're working closely with our vendor partners to collaborate on future forecast in buys.
With regard to the new normal while current sales are robust we know that the new normal will be difficult to project understanding that new normal will take some time and we plan to manage our inventory with intense scrutiny.
Specific to the second quarter, we expect additional volatility regarding tax free holidays in the back to school season, I will now turn the call back over to Mike for some additional comments. Thank you Gerry.
To wrap up our.
Prepared comments, let just a few more points about what makes hibbett sports different and why we're able to produce these results.
Number of factors make our business model more resilient than most other retailers first of all we have high demand categories and capitalize on current consumer trends, most notably fashion athletic apparel, but directly hooks connects with apparel, our store base locations provide us some built and advantages as well.
And of those factors.
Probably at the top list as we have limited exposure to malls at the same time excuse me, we're a small box retail or which means we just have fewer people in a store at any given Tom.
Furthermore, we have limited exposure to the largest metropolitan areas in the country, which as you know as in the hardest hit in the last few months.
And we expect that those factors mean less risk to both our consumers and our employees.
Another advantage, we have as our best in class digital platform, that's producing fantastic results as you've heard us say before we believe that no. One has a digital platform that compares the habits and as important as a platform is there is more important that it seamlessly integrates with our nearly 1100 stores in 35.
States. This allows us to provide BOPUS brokers biologic ship to store and.
In many cases same day delivery access to our consumers across the country.
And I'd like to brag about my team for just a moment within six hours of making the decision to implement curbside pickup we had the solution in place in the stores were executing the program under bins leadership.
And finally operationally we stayed in business throughout this crisis to remind you. We remained open in every community or was deemed prudent by local government.
That along with our emphasis on fulfilling online orders in the stores gave us a non stop connection with our employees and our customers and we're seeing that clear advantage of that decision now.
So in conclusion, we are being rewarded for these efforts when we reopened stores. We are fully staffed the consumers are excited the shopping our stores in the sales are very robust.
The digital business continues to comp up significantly as we take in key chair.
And our inventories and a good spot and our cash position is nearly back to levels equivalent to the end of the year.
So operator, we're now ready for questions.
Thank you Sir well now begin to question and answer session. If you would like to with just a question Chris one follow up by the four on your Touchtone phone.
Thats suite to pump to acknowledge your request. If your question has been into Didnt you, let Joel you registration.
One follow up by the tree.
Let me please for the first question.
Our first question comes from the line of Peter Benedict with Baird. Please proceed.
Hi, guys. Thanks for taking the question.
I guess first just wondering if you'd be willing to give any more detail on on maybe how much progress in one Q.
From a comp perspective.
And color on kind of digital versus stores and then certainly just where we are made to date understanding you guys are kind of give any guidance go forward, but.
Just any any more color on just how robust kind of may is running that would be my first question.
Ask a follow up.
Yes, Peter it's John Good morning, without a lot of details.
Yes, I think our commentary is pretty clear through mid March we were on a nice rather felt really strong about our business.
Then certainly the virus hit.
Obviously negatively affected sales from a brick and mortar perspective, we did see the significant ramp omni commerce and then as we got a latter part.
April.
And.
Things started.
To really move forward and it's a fast direction.
Without giving any specifics around may the way we've used a few times of sales are robust I think where we're being cautious is we don't know how long that this will lap that we feel great about where we are today, we're going to do everything possible to capitalize on it but we do have some things as we progress through the quarter that.
You are pausing for some concern.
Okay. Thanks Gerry.
I guess my next quarter my follow up would be.
With respect to the customer database, you mentioned that 40% of your I guess ecommerce customers in the first quarter were new to the database can you remind us.
Maybe how you're measuring that the I guess your rewards program.
How many members you've got how fast growing the percentage of sales and just curious how that 40%.
New in the first quarter compared to maybe what you saw across 2019.
Yes, I think we've been obviously that would be that picking up new customers throughout 2019, and then certainly since our introduction of E. Commerce, we start really picked up new customers. Both from an ecommerce perspective, and then our integration to the stores have allowed us to also pick up new customers at the stores.
The increase that we saw during the quarter was very significant I think it was attributable to a few things.
First of all the E commerce.
Specifically looked at the opportunity and.
Executed towards it we did not reduce our marketing spend which allowed us to continue to communicate to customers.
And then we had some flow and inventory that we continue to look at and made available for sale from an ecommerce perspective, the vast majority of our stores were able to pick pack and ship.
So the improvements we've made from an ecommerce spec perspective.
Allowed us to have more inventory available to sell a lot of it was high demand product and allowed us to capitalize on new customers.
Okay. That's helpful. Do you have a number for how many MVP rewards members you out maybe what percentage of sales are represent for you guys.
Yes, the percent of sales in the mid Sixty's.
So I mean, we're definitely seeing some nice growth.
Okay, all right. Thanks, guys.
Thank you.
Thank you for your question continuing on our next question comes from the line of San Jose with Susquehanna. Please proceed with your question.
Good morning, everybody. Thank you for taking my questions.
I have a list so I'll just ask them altogether, one how much do you believe that maybe some of the current trends maybe being impacted by the stimulus checks number two how should we think given stores are now all reopened how should we think about SGN a in second quarter I understand or not.
But we will help that would help.
And then.
What is sort of an optimum amount of aged inventory that you would.
You know sort of a longer term target of aged inventory.
Down the road thanks.
Thank you Sam this is Michael I'll handle the.
First one of those the stimulus.
Checks and other things to include unemployment compensation et cetera are for sure impacting the consumers.
There is some pent up demand as well.
There are some changes to the competitive landscape some of which are temporary some of which will be permanent or semi permanent.
And so it's hard to dissect.
Of those which is which in which is most important.
That's why we're being very careful to use terms like robust instead of giving actual numbers.
The may is as we said we're experiencing a very good result.
With those stores opening which will then lead into your next part of the question. So.
Now that we have substantially all the stores open what will Q2 look like.
I think I'll, just lean on what Jared referred to earlier.
And the reason that were not being terribly specific is just because the timing of back to schools going to change and.
Historically in the us southern half in United States. It was a earlier go back to school and Northern App a later.
We may say, we may see that change.
No one's ready to handicap that just yet and then Jared I think there was a question about aged inventory.
I think optimally.
Yes go ahead Sir.
Well I guess the question I asked regarding now that the stores are open was about the SGN, a and really about sort of more.
Technical last year, not not about marketing, but more about.
Now everybody's back you're paying more wages.
Pay more electric bills and things like that now that you've reopened all the stores so sort of how does the.
What's a base case rest gionee, which should be higher automatically in the second quarter as a rate anyway or didnt dollars that in Q.
Yes, sorry fumbled that answer thank you for reminding me so actually in a in Q2 should revert back to what we would expect would be closer to normal.
And that's.
Got a huge caveat with it which is.
What is normal going to be.
Yes, they will be impacted in Q1, I think we we disclose that about almost 100 basis points of the leverage.
Or de leveraging of that she and I came from onetime payments to employees that we don't expect to recur.
Other words that was the PEO and guaranteed hours and such that I referred to earlier.
That won't be there going forward.
We havent seen the need to significantly increase wage we certainly did some wage increases and the distribution centers as normal in due course those are more.
Tentative.
And less anything to do with a virus I know that we've done some things back to the stores. We did some things on guaranteeing a handful the bonuses for the store managers.
In the short term, but again that will revert back to normal.
And Bob you've got some additional comments I'm sure, Yes, sammis, Bob I guess, the one thing.
Kind of pointed out in my prepared remarks is we had to take a snapshot in mid April of where our business was and obviously that was one of the periods of time when things are pretty uncertain. So we did ultimately reverse some earn out liability related to the Citi. Your purchase but as we've seen our business start to bounce back and get a little bit.
Stronger that piece of our expense may start to fluctuate or be a little bit more variable going into the back up to three quarters of the year. We may have to reinstate some of that liability, which will impact our ESG in a run rate, but again thats a good thing because of the business is doing well than obviously, we would want to reward the former owners.
The business for that so I think it's kind of a win win.
Yeah, we'll be gladly raising that liability if the business supports that Beth.
Payout.
Okay.
Before we go out into the optimum.
Aged inventory question.
Just a follow up there.
We'll see.
What kind of comp do you think you're going to need in second quarter.
The leverage SGN I mean, how about that just what would you need to see leverage.
So again I know today.
Work.
We're in the middle of the quarter as in three weeks into it.
So we'll take it as it comes.
No I'm not asking you how businesses I'm, saying do you need to run at five comp to lever as Juday or do you think you could lever on I know, there's a mix issue to too.
Ecommerce, but but I mean, just just what would it take to to expect to see SG they leverage.
You know given what you know today I'm, not asking what you're running or anything I'm, just saying you need to run a five to do the do it.
And with the it will be a very very small comp to get some leverage yes, Sam I don't think what the lot of things that have been changing and we're still dealing with a lot of uncertainty.
Not that we feel that theres, a lot of unique or incremental cost to the business that we are doing some things weve certainly wouldn't have done in the past as far as.
Safety and sanitation things like that but again I think we're at a pretty good shape.
As far as are our cost the store sports on are relatively fixed.
We will see some increases as you touched on to stores opened more hours there will be some some upticks in some of those occupancy related type costs, but.
I agree with Mike I don't think we have to have a high hurdle rate, but to be very honest I don't think we know exactly what that numbers right now until we start to get a better run rate for the new normal.
Thank you.
Alright Jared.
Yes, and I'll chime in on the optimal eight so obviously weve been reducing our age.
System for the last few years.
Are you get to the to the upper end that exceeds.
We can operate in the mid to high teens, and we feel like Thats, an acceptable labor force.
And there was just thrown a little bit off in Q1, because of the because of the crisis and ebbs and flows by quarter, obviously, depending on which buckets of inventory movement to the six month or older.
It was a little more than one percentage point above.
Last year, but also keep in mind that the inventory did not grow the inventory was down so thats going to raise the percentage a little bit I mean overall, we feel like we havent under control.
Certainly scrutinizing everything right now with regard to inventory and or pay very very close attention to age gender age forecast.
But we feel like we havent managed appropriately.
Thank you very much.
Q.
Thank you Sam for your question.
Our next question comes from the line of Alex Parry with Bank of America. Please proceed with your question.
Hi, Thanks for taking my question and I hope everyone as well.
Just first for the stores that were closed and then REO Ben can you talk through the traffic trends you're seeing there on what some of the robust commentary like are you seeing positive customer traffic in those stores.
This is Mike, Yes, we are seeing positive traffic and.
On both the online side and then the stores that are reopened.
Seeing no trepidation on the part of consumers.
No no trepidation on the part of our employees and again, just harks back to the fact that.
People are doing what they're supposed to do so using their common sense and we're running say stores in accordance with the CDC guidelines.
Great Thats really helpful. And then just my second one is can you help parse out the E commerce growth in the quarter a bit more like how much of that was helped by the curbside pickup initiative and then your recent client initiatives and then the incremental digital investments can you talk through exactly what you're doing there to.
Drive traffic I think you had a quote that over 40% of the digital sales in the second half of the quarter, where new customers can you talk about what exactly is driving the new customer acquisition.
Sure. So this again as Mike said, a recast what we said digital traffic's up 80%.
Conversion is up 26%. This these are all Q1 numbers.
And those are all compared to prior year.
40% of the sales in the second half of the quarter, which I think is the relevant comparison, because that's when the change occurred the inflection point occurred 40% of those customers are new.
And we can track that through various means.
So why well some of that certainly is just the landscape change there were plenty of people who wanted to shop online who were not able to shop and brick and mortar. So we saw some increased traffic from that just like the majority of retail if you have a good website you probably.
We saw some increased traffic.
And we also at the same time put our foot on the gas with regards to digital advertising.
Others.
Other competitors did not and so we thought that that was a bit of a difference maker.
And for whatever reason, that's what they did we decided to invest in the business as you point out Clarida, our customer credit facility.
Is very successful, we're very pleased with that and it is having an impact.
So I could go on but.
There are lots of factors involved as to why the digital business has picked up.
And we believe that a lot of as we said 40% of those customers are news. So therefore, we are taking share.
And we believe that we like our odds to keep that share.
Great Thats very helpful. Thank you.
Thank you.
And once again, if you would like to register for question Presto, One followed by the full.
We now have a follow up question from the Ryan its time Jose with Susquehanna. Please proceed with your question.
So since his I'll go I've got three more one.
Can you talk about cash versus credit in the stores are you, taking cash or you handling that through separate registers through your safety policies and so on I know you have a large cash customer number two.
In working with the major brands.
As far as product allocations go going forward and Jared maybe some shifts.
How some of the major guys are shifting some of their launches and three.
Have you gotten rent concessions from your landlords.
Are you paying I mean, how is how are you.
No.
I guess, how is the rent payments working out and.
Or is everything current there.
Can you give us some color on sort of leases status there.
Well.
Then why don't you take the cash cushion in store, yes, Ams benign.
Real quick obviously, we run a pretty heavy cash business our consumers.
Obviously, I expect the ability paying cash and we continue to take cash out we have introduced a couple of things though too.
During the bars to obviously help keep our both our team members and our customer say that included essentially go into touchless pay with Apple and Google also we implement that ability now in stores. We also have turned on the ability with the chip embedded our credit transaction not too.
Our signature also we're doing things like that to try to mitigate obscenely risk.
Thank you.
Jeremy.
And I can comment on launches I mean I think.
As you know I mean, the launch calendar was fluid prior to this with a lot of that.
Anyway. So certainly there then some shifts I mean, our visibility that's in the plan we were very very confident did.
We believe there will be some shifts yes.
And those are things again, it's not abnormal to see shifts to the launch calendar.
What we know today again, we feel very confident.
But we'll manage this shifts as we as we get the information.
Okay.
I guess as Bob I'll take the third question on rent. So obviously the timing of this situation hit mid to late March.
We paid most of our rent for the month of April we did hold back a little bit and we continue to work with landlords, where there are situations either through the force majeure or co tenancy provisions within our leases.
Obviously the month of April was.
We're more store shut down for longer periods of time during that month. So we were also holding back some ramp for the month of May as we continue to work with the landlords I'm leaning heavily on obviously my legal partners to work through the channels with our landlords are trying to do all this in a very amicable very open basis, but yes, we do have.
Approximately $4 million with a Brent between the months of April and now may that have not yet been paid but have been recorded through the PNM was as expenses.
Okay. Thank you and if I can just follow up on one thing regarding the the allocations and so on.
Good.
Weve wisdom major launches.
We do you.
Is are the big guys willing to support the E Commerce site at a larger rate now or one of the things I saw was at the.
If you have a big launch issue and you end up putting a lot more online that could make it look overloaded rather than spreading it through the stores. So given that theres. So, but then so much more attention to digital.
Are the big.
And the details I guess changing the way they think about allocating product.
To you.
Based on where it's going to sell.
Yeah, I think Sam were all the we're all trying to figure out what the new normal is at this point.
Certainly.
We're still executing launches.
At our stores.
The significant it significantly detailed plan around how we do that.
So I think that Theres still plenty of opportunity I think it'd be initially in the crisis.
Certainly we did pivot more digital.
And again in collaboration with our vendors I think we all have a lot to learn right now with regard to sharing that we can keep people safe and then we can execute launches appropriately.
But there has not been conversation that we've had with specifics around can or can't do it's all a collaborative effort as we go forward and learn.
Thanks, I guess I just I meant that if all of this study, even though you're doing 40% 30% of your business online.
We use had do you think that that will will that change.
The way the product gets out do you think it would change the quantity.
I'm, we're talking about just demand not the way you're managing the stores ability to do it I'm, just saying if more people become comfortable shopping online do you foresee that you'll be able to keep the same kind of allocations.
I think I think that it's a twofold question I mean, obviously, we could see customers being more comfortable online, but we also know that our launch customer has a store total if they want to where it on the day at the launch and they want to show it off.
Which obviously that's not something you can do with regard to online at this point so I.
Again, Sam I think we have to continue to mine information that we're getting from customers collaborate with the vendors and try and remain as balance as we can.
To be able to give consumers what they want.
We've seen.
From a launch perspective, we've seen execution of digital with significant pairs that is flawless and we've seen execution at the store level with significant pairs that.
We felt was pretty flawless. So I think at this point, we just have to learn what that's going to look like from a go forward perspective.
Thank you so much appreciate it.
Yes.
Thank you.
Well now turn the conference back to Mr. lung.
Thank you Sir.
Well. Thank you very much. We appreciate everyone attending today, we know your times valuable and we always enjoy speaking to our business and about it and since there are no further questions. We'll conclude the meeting and thank you again.
Thank you Sarah.
That does conclude the conference call for today, we thank you for your participation in US. Please disconnect. Your lines. Thank you very much and have a great JMP one.
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