Q4 2020 Container Store Group Inc Earnings Call
[music].
Greetings and welcome to the container store fourth quarter 2020 earnings call at.
At this time all participants are in a listen only mode.
A brief question and answer session will follow the formal presentation.
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A reminder, this conference is being recorded.
It is now my pleasure to introduce your host Caitlin Churchill Investor Relations.
Good afternoon, everyone and thanks for joining us today for the container store at fourth quarter and fiscal year 'twenty 'twenty earnings Conference call.
Speaking today are the teach Malhotra, Chief Executive Officer, and Jeff Miller, Chief Financial Officer.
After cessation of Jeff have made their formal remarks, we will open the call the questions.
Before we begin I need to remind you that certain comments made during this call regarding our plans strategies expectations regarding liquidity and goals, our anticipated financial performance and our plans in response to COVID-19 of the potential impact of COVID-19 on our business may constitute forward looking statements and are made pursuant to and within the meaning of the safe Harbor.
The provisions of the private Securities Litigation Reform Act of 1995 and such.
Such forward looking statements are subject to both known and unknown risks and uncertainties that could cause actual results to differ materially from such statements.
So it's important factors of referred to in the container stores press release issued today and in our annual report on form 10-K filed with the SEC and true 17th of it's funny.
The forward looking statements made today are as of the date of this call and the container store does not undertake any obligation to update the forward looking statements.
Finally, the speakers may refer to certain adjusted or non-GAAP finance financial measures on this call a reconciliation schedule of the non-GAAP financial measures to the most directly comparable GAAP measures is also available at in the container stores press release issued today.
A copy of today's press release may be obtained by the thing the Investor Relations page of the website at Www Dot container store Dot com.
I'll now turn the call of participation cash.
Thank you Caitlin and welcome everyone to our Q4 end full year earnings call.
Since joining the company at the start of February I've now met with teams across our organization.
At work closely with them to understand our core strength and where the opportunities lie.
These past few months have reconfirmed my belief that the container store has a strong foundation.
This company has built a unique position as the authority in providing our loyal customer base with creative multifunctional customizable storage and organization solutions.
Our passionate teams are energized by the recent momentum and are eager to make the container store the.
Best version of itself.
Numerous studies illustrate the benefits of leading an organized life.
Including reduced stress and improved emotional wellbeing.
Our unique competitive advantage comprised of extensive product assortment customizable solutions and expert team members help our customers realize these meaningful benefits.
Additionally.
We believe the addressable market is more than $20 billion, when including the largest storage and organization market to the custom closets opportunity.
While the container store holds a piece of that market today, we are keen to gain more market share.
As a reminder, we offer a complete end to end experience to our customers.
And we do that through our custom closets.
Home organization services, and our extensive general merchandise categories.
This is all supported by our Omnichannel presence.
To dominate in this large addressable market, though we will focus on deepening our relationship with our customer.
Expanding our reach and.
In strengthening our capabilities.
Before expected before expanding on these areas of focus.
Let me first review briefly our phenomenal fourth quarter performance, which Jeff will discuss in more detail.
The incredible momentum we saw in the third quarter continued into the fourth quarter.
We delivered results ahead of our previously provided outlook for.
For the fourth quarter consolidated net sales were $314 $7 million up.
34%.
With an adjusted EPS of <unk> 71 set of <unk>.
Compared to 26 cents last year.
Our outstanding performance for the second half of fiscal 2020, combined with our disciplined focus on liquidity allowed us to end the fiscal year with a strong balance sheet.
We generated free cash flow of $121 1 million.
Of which we utilized approximately $78 million to pay down our senior secured term loan.
We also saw continued growth of our top loyalty program.
We recently surpassed 10 million members.
And celebrated this milestone by asking out of lower members to describe why they love the container store.
And the responses the hot.
<unk>.
For example, one member said I love the container store because it helps me reduce my stress by providing fantastic products to organize my home and life.
Another member said I love the sense of peace and contentment that comes with an organized space.
Thank you container store.
We received many responses that echoed these powerful customer sentiment.
We have not only successfully maneuver at an unprecedented 2020, but we've also positioned ourselves to thrive by launching innovative products and marketing partnerships acquiring new customers and strengthening our financial position through prudent expense.
Management and debt reduction.
With the strong foundation, we are moving forward.
To make the container store the best version of itself.
The next chapter of the container store will be an evolution of who we are today.
We aim to deliver a more purpose led mission.
The enrich and transform the lives of our customers through the power of organization.
As I mentioned, our focus going forward will be in three key areas.
Deepening our relationship with our customers.
Expanding our reach and strengthening our capabilities.
Let's start with deepening our relationship with our customers.
A recent survey we conducted informed us that our customer chose to make the most of the home during the pandemic.
Organizing spaces within the home help provide them with a sense of calm and control in an otherwise chaotic environment.
Customer so the container store as the authority in assisting them in Decluttering and distressing.
They valued both our extensive multi functional and inspirational product assortment and our friendly engaging and knowledgeable employees.
We believe we can successfully deepened our relationship with our customers by concentrating our efforts on our product assortment in store shopping experience and branding.
Regarding our product assortment.
Our customers Crave discovery inspiration and solutions that simplify their lives.
And maximize their spaces within their homes.
And we aim to deliver just that.
We will do this through product newness.
<unk>.
The expansion of our superior of private label assortment and the amplification of our sustainably sourced products.
I am pleased to share that we have rapidly grown our sustainably sourced products in just the past few months to approximately 10% of our assortment.
This achievement was fueled by the launch of our exclusive partnership with Marie Kondo, featuring more than 100 sustainable products.
And later this summer we will be launching a sustainable collection with the home at it.
Our commitment to sustainability goes beyond brand collaborations, though as we look to expand our assortment of natural fibers.
And explore new auctions for renewable of source products and recyclable products.
This important initiative will be further supported by our newly hired vice president of merchandising.
Turning to our in shopping experience at <unk>.
Customer also yearn for a friendly and engaging shopping experience with trusted and knowledgeable employees.
We know that customer to engage with an in store employee convert at a significantly higher rate and spend more than those at delek.
To foster a deeper level of engagement, we will be enhancing our air of excitement in stores, but at.
The host zoning key areas and creating memorable experiences with in store play zone and demonstrations.
Customers will also see more curated visuals that inspire and teach.
And our marketing campaigns will focus more on product discovery.
Our expert organizes will be available to provide the highest level of service.
In our stores.
We'll become the ultimate estimate destination.
The customers looking for new ways of living.
Through the power of organization.
Finally, we know branding that evokes emotion is far more impactful than functional messaging.
We will refine our vision and purpose to galvanize this emotional connection and champion the enriching benefits of living an organized life.
This will include utilizing more before and after and real lack of images and user generated testimonials and stories.
We will also cost of life customer interactions and embed emotional lifestyle elements across our customer journey.
All of which will be supported by an enhanced loyalty program that rewards a deeper level of engagement.
Let me now turn to our second priority.
Expanding our reach.
Starting with custom closets and home solutions.
We own a fraction of the custom closet market and we are eager to amplify our share of that market by harnessing our end to end value proposition.
For example, we will now intentionally per hour in home organizer with our custom closet customers the.
Income organizer will not only help customers organize the newly installed space.
But will also help them find the right products that will complement that new space.
Our objective here is to provide our custom closet customers with an orchestrated and friction less end to end experience that they will come to value.
We will also be introducing the endless possibilities of Alpha two hour every day general merchandise customers through our curated alpha started assets and grab and go solutions.
We believe that once our general merchandise customers experience the power of Alpha they will likely transition into purchasing of custom design space and we generate the lifetime value that has many many multiples above their acquisition cost.
Additionally, we aim to enhance our custom closet product line.
We have historically done very well and driving market share for spaces under $2000, but we see significant opportunity to improve our market share and spaces above $2000.
Our current of Vera promotion has demonstrated our ability to successfully sales spaces that average over $6000.
And lastly, we're also keen to grow our beach of B and trade program.
We have just brought the program in house and of organized at under one central leader at <unk>.
New Vice President and general manager of custom closets.
And in doing so we expect the program to flourish.
Now turning to our plan for E Commerce.
For fiscal 2020, our website generated sales.
Sales of curbside pickup grew 121%.
Digital commerce has expanded across all social platforms.
Mobile now accounts for two thirds of our online traffic and we plan to accelerate our growth by significantly improving the everyday online experience.
This includes executing our three new strategic partnerships.
With Navarre, we will fulfill we will improve fulfillment transparency for our customers and make returns easier for them.
With its the court, we will enhance our delivery capabilities with the same day delivery.
And with after pay we will offer customers the flexibility of a buy now pay later option.
We are excited about the future growth potential of our E Commerce business.
Yeah.
Regarding our store network and collaborations.
We know that our customers value at physical stores and the connection that they make with our trusted and knowledgeable employees within them.
We also know there is significant white space opportunity for the container store, which we will address over time.
Our immediate focus is on maximizing the productivity of our existing store fleet.
Which will be which we believe is a meaningful opportunity.
And we would realize this opportunity by deepening our relationship with our customers.
Through our product assortment in store shopping experience and branding.
We are also determining our future store growth plans, though the.
This includes the idea of go forward store size and configuration.
We know that still that smaller store format work well through the tests that we've conducted to date and we have reason to believe we can go even smaller.
We plan to test the smaller and more productive store during fiscal year 2022.
In addition, we also believe we can expand our reach by exploring a shop within shop concept with quality retailers could complement our business.
Our newly hired Vice President of real estate will help further formulate our expansion plans.
Yeah.
As it relates to collaborations the new.
Turning of our relationships with the home edit and Marie Kondo will continue to prosper with the release of the highly anticipated shows on Netflix.
We are also cultivating new relationships with Influencers that have category credibility and can expand our digital presence.
For example, our kitchen category will soon be supported by newly formed culinary partnerships.
These mutually beneficial relationships allow us to reach new and existing customers and creative ways.
Yeah.
Our third and final priority is to strengthen our capabilities.
We plan to do this in four ways one through continuous improvement.
We can tell at capturing operational efficiencies through process reengineering and leveraging technology in a way that allows us to become more efficient.
Operational efficiencies will be reinvested back into the business to support our strategic priorities.
Two I think.
By becoming an employer of choice and fostering an environment that is diverse inclusive and equitable.
The recent hiring of a new head of diversity equity and inclusion will support this critical initiative.
Three by by expanding our focus on environmental social and governance initiatives.
I'm proud to announce.
That as of today the.
Power used by all of our stores distribution centers and corporate office will now be offset by our investment in 100% renewable energy.
Additionally, we will perform a materiality assessment in fiscal 2021 and at just hired a new head of ESG to support this effort.
And finally, we will strengthen our capabilities by creating a more streamline the organization that is aligned to our strategic priorities and.
And as previously mentioned, we have made several critical hires to complement our current leadership team.
We are thrilled at the container store of the ability to attract great talent.
Including the recent recent addition of a new Chief Information Officer <unk> <unk>.
In summary of these strategic priorities that I've, just laid out are expected to drive market share gains and effectively double.
Our business overtime.
And all the while unleashing the.
The enriching benefits of organization to our customers.
In closing I could not be prouder of our teams for the accomplishments.
The day achieved before four of my arrival.
They navigated a challenging and dynamic environment throughout fiscal 2020 incredibly well.
And they are hungry to win.
Has fueled this powerful brand.
Additionally, these results could not have been made possible without my predecessors steady leadership and resolve the survive.
As we look ahead.
We are eager to make the container store of the best version of itself.
I'll now turn the call over to Jeff.
To review, our financial results and outlook in more detail.
Thank you Satish and good afternoon, everyone at.
That's the key share our fourth quarter performance exceeded our expectations. These results underscore an unprecedented year that require discipline and dedication from all of our teams at <unk>.
Not be more proud of our results and the strong footing with which we enter fiscal 2021.
For the year, despite the impact of COVID-19, 19, and resulting store closures, we delivered sales of $991 million and adjusted EPS of $1 24 of these.
These compared to sales of $916 million and adjusted EPS of <unk> 30 in fiscal 2019.
Fiscal 2020 includes approximately $17 7 million of incremental sales.
And seven of incremental adjusted EPS related to the 50 <unk> week.
And turning to the fourth quarter.
Consolidated net sales inclusive of the 50 <unk> week were $314 7 million at 34% increase year over year.
By segment.
Net sales for the container store retail business increased 31, 3% to $294 2 million compared to $224 1 million last year.
As previously mentioned the 50 <unk> week contributed approximately $17 7 million of incremental sales to the fourth quarter.
And as a reminder, in Q4 of 2019, we had 51 store closures in the last few weeks after the quarter of.
Of which 19 were closed longer than seven days.
General merchandise categories, we're at 41, 6% in Q4.
Contributing 19, 4% of the 31, 3% Inc.
The increase.
Custom closet sales driven by our annual Elfa sale were up 22, 2% and contributed the remaining of 11, 9% of our sales increase.
Sales from our online channel were strong in Q4, increasing 72, 2% over the previous year. When you include curbside pickup our website generated sales in Q4 were up 92, 7%.
These represent a total of 27% of Tcs net sales compared to 18, 4% in Q4 last year we.
We ended the quarter with a normalized level of orders taken but not ship totaling approximately $1 3 million.
Elfa third party net sales increased 18, 8% the $20 5 million at.
Excluding the impact of foreign currency translation Elfa third party net sales increased 5% year over year.
Okay.
From a profitability standpoint, our consolidated gross margin for Q4 was 59, 3% compared to 59% last year.
At the 30 basis point increase was driven by higher end intercompany profit on sales of Elfa products at Tcs This year as compared to last year by.
By segment the gross margin at the container store decreased 60 basis points, primarily due to the increased shipping cost as a result of higher mix of online sales and an unfavorable mix of lower margin product and service sales.
These costs were partially offset by less promotional activity.
Elfa gross margin decreased 70 basis points, primarily due to higher direct material costs.
Consolidated SG&A dollars increased 16, 4% the 100, $123 4 million compared to $106 1 million in Q4 last year.
As a percentage of sales SG&A decreased 480 basis points versus last year.
The decrease is primarily due to the leverage of occupancy and payroll costs on higher sales during the quarter.
Our net interest expense in the fourth quarter of fiscal 'twenty decreased 29, 6% to $3 7 million from $5 3 million in the prior year. The decrease is due to a lower principal balance on our senior secured term loan facility with lower interest rates.
The effective tax rate for the quarter was 25, 8% compared to 29, 7% in the fourth quarter last year.
The decrease in the effective tax rate is primarily due to the impact of discrete items on higher pre tax earnings compared to fiscal 2019.
Net income net income for the quarter on a GAAP basis was $35 1 million or <unk> 69 per diluted share. This compares to GAAP net income of $12 5 million or 26% 26 cents per diluted share in the fourth quarter last year.
Adjusted net income for the fourth quarter of fiscal 2020, with $35 7 million or <unk> 71 per diluted share.
Included in both GAAP and adjusted earnings per share for the fourth quarter of fiscal 2020, as an approximate <unk> <unk> benefit from the 50 <unk> week.
Our adjusted EBITDA increased 66, 8% to $59 5 million in the fourth quarter this year compared to $35 7 million in Q4 last year.
Turning to our balance sheet, we ended the year with $17 $7 million in cash.
166.
And net borrowings on our term loans.
Liquidity, including availability on our revolving credit facilities with approximately $126 8 million. Our current leverage ratio is approximately one times.
We ended the quarter with consolidated inventory up five 2%.
While we've been able to keep inventory reasonably in stock we continue to chase inventory in certain categories due to supply chain disruptions and have to adjust at our lead times. Accordingly. These adjusted lead times, along with increased sales have led to increased inventory investment.
We are very pleased with our strong free cash flow performance, we generated a $121 1 million and free cash flow during the year up significantly from last year, when we utilized $2 9 million of free cash flow.
We use the substantial portion of that free cash flow the pay down the balance on our term loan by approximately $78 million during the fiscal year and drive down our leverage ratios.
The approximate $78 million Paydown is inclusive of a $25 $5 million payment, we made during fiscal fourth quarter 2020.
Total capex for the fiscal year was approximately $17 2 million.
We deferred approximately $12 million of certain cash lease payments in the first quarter of fiscal 2020.
Of that amount of about $4 7 million remains deferred at the end of the fourth quarter, almost all of which is expected to be repaid in fiscal 2021.
As we enter fiscal 2021, we are very pleased with the start of our fiscal first quarter.
We continue to see strength in our custom closets and general merchandise categories.
As a reminder, we will be lapping certain pandemic driven store closures that occurred in the first quarter of fiscal 2020 as a result.
We expect Q1 consolidated sales growth to be approximately 50.
The 50%.
Adjusted EPS in the first quarter is expected to be approximately nine.
Embedded in our earnings outlook is the continued impact of incremental shipping surcharges and higher commodity prices on our gross margin.
However, we do expect Q1 fiscal 'twenty, one gross margins to improve over last year.
We expect the gross margin improvement over last year is due to a lower mix of online sales in the first quarter of fiscal 'twenty, one as compared to last year, when we experienced temporary store closures and more promotional activity.
As it relates to SG&A in our first fiscal quarter.
Of 'twenty, one we expect to leverage fixed cost on higher sales volumes when compared to the same period last year. However, we don't expect SG&A leverage to be at the same levels. We experienced in the second half of fiscal 2020, as we restore certain expenses that were temporarily.
<unk> eliminated in response to the pandemic combined with seasonally lower sales in Q1 as compared to the second half of the year.
Sure.
We're not providing full full year guidance at this time due to the unusual and dynamic environment, and which can create a wide range of possible outcomes. However, I will share of framework that will hopefully.
I'll hopefully be helpful. As you think about bottom line dynamics for the full fiscal year 'twenty, one as we cycle and unprecedented fiscal 2020.
And of scenario, where sales increases are in the low single digits compared to last year. We would expect 150 to 200 basis points of operating margin contraction in fiscal 'twenty, one compared to fiscal 2020.
The expected operating margin contraction is related to the combination of lower gross margins and higher SG&A in terms of dollars and as a percentage of sales.
As it relates to gross margin like other retailers, we are seeing freight and shipping cost headwinds along with higher commodity prices. We plan to employ multiple methods to help mitigate the impacts of higher cost which include vendor negotiations actively managing our supply chain, along with adjusting our retail pricing and promotional cadence.
On the SG&A side, we plan to restore certain expenses that were temporarily pulled back in fiscal 2020 as part of our pandemic management strategy, such as reinstating 401k match and merit increases.
The gross margin and SG&A pressures will be evident in Q2 and will build.
Through the remainder of the year.
In fiscal 2021, we currently expect total capex.
To return to historical levels, we expect capex to be approximately $47 million.
And of include investments in technology infrastructure and software projects existing store merchandising and refresh activities, our elfa product manufacturing capabilities and new store development inclusive inclusive of one location opening in fiscal 2021 and another anticipated in fiscal 2022.
Additionally, we expect interest expense to be approximately $14 million and our effective tax rate to be approximately 30%.
In closing overall, we are proud of our fiscal 2020 performance and the strong footing in which we have started fiscal 2021, we look forward to executing on the strategic priorities. So teach laid out and updating you on our progress throughout the year.
That concludes our prepared remarks, I will now turn the call over to the operator to open up the lines for questions.
Thank you.
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One moment, please only now poll for questions.
Our first question comes from Steven Forbes with Guggenheim Securities. Please proceed with your question.
Good evening.
You mentioned higher conversion and spend right among customers who visit the stores.
Just curious if you could provide a little more context here right as we think about yeah of the current I guess channel penetration rates in the business.
Maybe if you can talk about the typical customer journey right yeah.
Those customers who are purchasing of line do they visit the store first often.
What is the difference in conversion <unk> spend and any sort of numeric statistics that you can speak to would be helpful.
Hey, Steve how are you.
Doing well thank you.
Thank you for the question.
But what I will tell you is based on some of the research and studies that we've done.
Obviously any time that we can greet a customer.
And then engage with them.
C at both our conversion and our average ticket increase and Thats why we feel.
Very excited about our ability to add host into our stores and to ensure that we have zoning ready for our employees.
It's something that we're very excited about.
We've actually just under the taken.
The industrial Engineering study, where we're now pulling back some.
Well that we would spend on non selling activities and reinvest it back onto the setting the stage. So that we can be available for those customers that walk into the door.
And here's the opportunity on the conversion side in the online part of our business to where we're investing.
Steve, where we where we can make it easier for our customer to interact.
Throughout our website, whether it's through search through payment methods with our recent announced.
The strategic partner partnership with after pay.
We can find multiple multiple ways to get higher conversion of higher ticket with our customer rates regardless of channel.
Okay.
Thank you and then maybe just at a quick follow up at might might be a little early but I feel like it's top of mind and certainly for myself.
As we think about the potential for.
For the return rate of or a re acceleration in unit growth you mentioned testing of small format store I believe right.
Next year.
And then you also mentioned.
Our store within the store concept, so any of any sort of thought on the right cadence of growth whether it's on the footage basis or how far out is that store within the store concept is it still sort of in.
The idea of formation stage or do you have partners in mind.
Right.
Well, Steve as I mentioned, our second priority is definitely to expand our reach.
And we definitely recognize the significant white space out there to open a new doors as well as the shop within shop concept, assuming we can find a quality retailer.
Which we are confident we are looking for but our immediate focus is to really maximize the productivity of our existing channels.
And I think that is the right focus for us to take and particularly when you think about our stores and ecommerce business and how they are going to really greatly benefit from all of that product newness collaborations the private label sustainably sourced products and the way that we will introduce the alpha start of sets and grab and go.
So that's just one sliver of how we're looking to increase our growth within our existing footprint and we talked about the air of excitement that's going to that we look to bring about and really foster of deeper engagement with our customers and our excitement around amplifying our custom closet market.
So there was at just a few areas of focus that we have in the in the immediate term to improve our productivity at.
And that will in concert B.
At the same at the same manner as we look to explore what our future footprint is.
As I mentioned, we have just hired a vice president of real estate and he kind of joined us at a better time as we worked through our growth plans.
But we are confident that we.
We will be testing a smaller store footprint in the fiscal 2022.
And thats going to give us a lot of information for us to deploy out of future.
Both plants.
Yes.
Thank you best of luck.
Okay, great. Thank you.
Thank you.
As a reminder of our audience. If you would like to ask a question. Please press star one on your telephone keypad.
Our next question comes from Tami Zakaria with Jpmorgan. Please proceed.
Hi, Thank you so much for taking my questions. So my first question is more along the time I think you mentioned on your call that you.
You'd see at $20 billion Tam for your business at.
I thought that was very interesting. So can you talk about.
The the gross that segment has seen.
In the U S over the last few years and are.
Looking ahead as you build these initiatives you talked about do you believe you can start growing in line with this this segment's gross or is there opportunity to outgrow the market any thoughts on the long term.
Gross potential you see.
Yes. Thank you Tony for the question look we're really excited about the expansive addressable market right. It's one of the reasons, we called out the $20 billion of opportunity.
And we are so eager to get started on at that we've already kicked off several key initiatives that are going to allow us to capture that growth immediately we talked about when the.
When you think about deepening our relationship with the customers we talked about how we're already growing our sustainably sourced products of 10% of our assortment.
We're in the midst of rolling out dedicated end caps in our stores at.
The website now spotlights the use of friendly in depth guide for all of our sustainably sourced items and then we are going to be launching the home at at collection Sustainable collection. Later this summer. So that's just one example of what we're doing to capture this growth immediately we've already started to accelerate the expansion of our private label business.
We've added host as I mentioned earlier, and we're personalizing, our interactions with our customer through targeted E mails.
When I think about our expanding our reach I have to say I was extremely happy.
With the way that our targeted of Vera promotion has allowed us to successfully deliver premium spaces, averaging over $6000. It was a great way for us as the company to focus on our promotion and really see what we're capable of and the results of being quite impressive.
So, bringing the <unk> business in house, and we expect to see further growth coming from that.
Jeff mentioned the implementation of some of our E Commerce strategic partners with Navarre and after pay with piloting in the court right now in Texas, and it's doing very well.
And so when I think about the size of the price and our ability to quickly go after at hopefully the actions that I've just stated demonstrate that we're not waiting.
And we are really excited and eager to go app to go after that.
That growth as quickly as we can get.
The teach out of ads that I mean.
We are the only retailer that has the unique position that we have right we talked about at already in the priorities that we're.
We're laying out here on this call is going to allow us to tap into that marketplace, even even more efficiently more effectively.
And totally of great.
Got it Super helpful. And then a quick follow up can.
Can you remind us what percentage of your sales is currently at.
The custom closets and given other products are seeing a nice benefit from all of these collaborations.
What's your sort of vision for the custom closet business in terms of its contribution to the total business like where do you see the mix of this custom closet line go overtime.
The Etame right now our custom closets business as approximately 50% of our total.
And.
As we've continued at a heavily focus on customer costs, we expect.
For that to continue to grow along with it.
We're not necessarily sharing projections on how fast it's going to growth, but certainly it's part of the our ability to double our business to $2 billion.
Over the over the next few years, that's a big piece of the equation, that's right and primarily the reason were not able to tell you. The mix. There is because all of these initiatives are going to be driving growth in each of the priorities will contribute at.
At various stages and so it's difficult at this stage to to donate.
What what percentage is going to be grown by which particular channel.
Got it got at that makes sense great. Thank you so much and best of luck the best of luck for the.
The current quarter.
Thank you Tim Thank you Tammy.
Thank you.
There are no further questions at this time I'd like to turn the floor back over to management for any closing remarks.
Okay great.
Well. Thank you so much for joining us today, and we look forward to making the container store of the best version of itself have a great afternoon.
Ladies and gentlemen. This concludes today's conference you may now disconnect your lines at this time.
Thank you for your participation and have a great day.