Q2 2021 Lifetime Brands Inc Earnings Call
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Good morning, ladies and gentlemen, and welcome to the lifetime brands second quarter 2021 earnings conference call and webcast at this time I would like to inform all participants that their lines will be in a listen only mode.
After the Speakers' remarks, there will be a question and answer period.
We would like to ask a question. During this time. Please press star 1 on your telephone keypad I would now like to introduce your host for today's conference Andrew Squire. Mr. Squire you may begin.
Yes.
Thank you good morning, and thank you for joining lifetime brands second quarter 2021 earnings call with US today from management are Rob Kay Chief Executive Officer, and Larry window, Kurt Chief Financial Officer.
Before we begin the call I'd like to remind you that our remarks. This morning may contain forward looking statements that relate to the future performance of the company from these statements are intended to qualify for the Safe Harbor protection from liability established by the private Securities Litigation Reform Act.
Such statements are not guarantees of future performance and factors that could influence. Our results are highlighted in today's press release and others are contained in our filings with the Securities and Exchange Commission.
Such statements are based upon information available to the company as of the date hereof and are subject to change for future development.
As required by law the company does not undertake any obligation to update such statements.
Our remarks this morning, and today's press release also contain non-GAAP financial measures within the meaning of regulation G promulgated by the Securities and Exchange Commission included in such release is a reconciliation of these non-GAAP financial measures to the comparable financial measures calculated in accordance with GAAP.
That introduction I'd like to turn the call over to Rob Kay. Please go ahead Rob.
Thank you.
Good morning, everyone and thank you for joining us today to discuss lifetime brands second quarter 2021 financial results.
Before we begin I want to thank the lifetime team for their dedication and hard work that has once again delivered exceptional results.
Driven by the lifetime to point out a strategic plan that we implemented beginning in 2019.
Lifetime continues to achieve strong results.
During the second quarter of 2021.
We continued our excellent momentum from the start of the year as well as from 2020.
Our results this quarter reflect the continued strong demand for our products.
Leading to solid sales growth across our bad day.
Which combined with our continued focus on cost control and operating efficiency continues to produce double digit bottom line growth.
No.
Lifetime continues to outperform and the majority of our categories and across channels as we focus on providing product wherever consumers are shopping.
During the quarter, we delivered topline growth of approximately 24%.
Driving net income of $5.8 million compared to a net loss of $4.1 million in the second quarter of 2020.
We also delivered a gross margin dollar increase of roughly $12 million or 22% during the quarter.
As we successfully manage cost pressures throughout our business.
In addition to strong top and bottom line results.
We have continued to generate significant free cash flow.
This cash flow generation has fortified our balance sheet and.
Enabling us to continue to deleverage, while also maintaining our rapid pace of investment in the business and inventory.
As well as funding our strategic growth initiatives.
Giving us a distinct competitive advantage.
With that let's turn to review of our core U S business.
I am pleased to report that we delivered our eighth.
A quarter of year over year growth.
Similar to prior quarters, our strong results were a result of increased market shares.
The elevated demand across many of our product categories.
During the quarter, we have also begun to see revenue from some incremental growth initiatives.
Such as our beautiful launch at Walmart.
And the rollout of our kitchen, Inc. Com.
While we continue to benefit from our strategy to invest in increased inventory levels to assure product availability for our customers and consumers.
We also experienced some pressure on margins driven by macroeconomic factors, including inflation and increases in labor and shipping costs.
The current global shipping crisis meant that we were unable to fulfill all of our open orders for the quarter.
I'll touch on this in more detail shortly.
As you can see by our results we were still able to achieve very strong revenue growth of 24% for the quarter and 29, 5% year to date.
Spike the supply chain headwinds affecting our industry.
Moving to e-commerce.
This channel.
Channel continues to show strong growth.
It is worthwhile to point out the pandemic and post pandemic impacts on brick and mortar as well as e-commerce channels.
A year over year comparison difficult.
In the second quarter of 2020.
Brick and mortar stores were substantially shuttered.
With stores in most geographies opened in 2021.
Tumors rapidly returning to brick and mortar locations has resulted in a decline of pure play e-commerce sales as a percentage of our overall sales.
For the second quarter.
E Commerce sales as a purchase or as a percentage of revenues was 16, 1%.
This results from a decline in dollar growth compared to the second quarter of 2020 or 25, 9%. However year to date, our e-commerce sales have grown 9.7% compared to prior year.
For perspective, our e-commerce revenues in total have grown more than 60% since the beginning of the pandemic and by more than 70% compared to second quarter 2019 level.
The slower growth growth rate year to date is reflective of the impact of the COVID-19 related closings of brick and mortar retail locations, which drove sales to the E Commerce channel during the second quarter 2020.
When viewed in this context.
Our online business continues to grow meaningfully.
Particularly on a pure dollar sales comparison, given the growth in the overall business.
E Commerce remains an important growth driver for lifetime.
And in addition to our pure play growth. We've continued to see very strong shipments with our omni channel retailers, which we do not track separately.
Moving to our international business.
Our turnaround plan that we fully implemented in 2020.
Continuing to deliver improved performance in our international operations.
We continue to be on plan from a profitability perspective, although we have seen some impact to revenues due to continued COVID-19 and Brexit related challenges in Europe.
However, the strength of our Asia Pacific business.
Coupled with our improving performance in Europe allowed us to deliver solid bottom line results and we expect to continue this momentum moving forward.
Specifically.
Revenues for the quarter grew $2.6 million or 14, 9%.
And EBITDA contribution grew $1.4 million or 67% compared to the comparable period a year ago.
Year to date, EBITDA contribution has improved $5 million compared to the comparable period a year ago.
Okay.
As I mentioned at the outset, we have continued to invest in our growth initiatives.
And have seen encouraging progress across the board.
With Mcarthur hospitality.
We are strongly encouraged by the tenor and results from sales conversation.
And we see continued opportunities from the disruption to the hospitality industry that has resulted from the COVID-19 pandemic.
As we begin to build our book of business.
We expect to start seeing revenue increase through this year.
And Mcarthur hospitality remains on track to be profitable by the second half of 202002.
Okay.
Long term, we continue to see this as a huge market opportunity for us and 1 where we have a right to win.
Our development stage online tabletop platform year on day.
He is on track to relaunch in the fourth quarter of this year.
As we have discussed previously we are.
We're excited about this strategic acquisition, which will enable us to reach millennials and Gen Z consumers and enhance our dinnerware offering for this high value age group.
We continue to expect the transaction to be accretive by 2022.
And longer term, we see this brand as a potential $10 million revenue.
In terms of our other brands and product growth initiatives.
As I mentioned previously our beautiful by drew Barrymore brands of kitchen tools gadgets and cutlery.
Has now launched at Walmart and is currently in market and gaining traction.
We see opportunity to continue to expand this product line moving forward.
Our kitchenaid expansion also continues to gain traction both with the introduction of new product lines such as cutlery.
As well as international growth as we take advantage of the strong global brand equity.
And rollout this line across various international markets.
Finally, we are ramping up our new offerings in the barbecue, Pat and storage and organization categories.
We are still in the early stages of establishing these categories.
But initial product launches have been successful.
And we are positioned to see more meaningful revenue contributions starting in 2022.
Let me take a few minutes to touch on the current operating environment.
Following the reopening of global economies, we have seen post pandemic demand increase across numerous indices, including ours.
However, despite continued strong global demand for our products. We are also managing certain macro economic headwinds.
The lingering effects of Covid and new variants have resulted in key port closings in Asia and impacted the broader supply chain.
As a result of a combination of factors, including these impacts from demand surges from goods from Asia Covid.
Covid complications and go global shipping imbalances.
We have seen shipping cost significantly elevated and other costs have also increased as a result of the current inflationary environment.
We are actively working to mitigate these headwinds through a number of initiatives to drive down our operating costs Inc.
Increase our flexibility and invest in inventory levels to ensure availability of our products.
And we have implemented price increases that should start to show up in our results in the third quarter with a more impactful resolve coming online in the fourth quarter.
Okay.
The ongoing the ongoing global shipping and inflationary challenges will impact our margin percentages.
Till we can fully mitigate these impacts as we prioritize meeting strong demand levels and producing margin dollars over maintaining margin percentages in the near term.
Before we turn to our financial guidance I wanted to expand on our recent disclosure we made regarding our decision decision to sell a portion of our stake in Grupo <unk> net.
As a reminder, we have had a passive 30% equity investment in Grupo <unk>, Tony at the largest housewares company in Mexico.
This investment was made in 2007.
We recently disclosed an agreement to sell approximately 8.5% from our stake.
For approximately $3 million and net cash proceeds.
As group our basketball he is not core to our business and does not contribute materially to our earnings we will continue to seek opportunities to monetize monetize this asset.
Now turning to our financial guidance.
Despite the industry and macroeconomic environment I just described.
We continued to produce strong results and remain confident in our ability to execute in the second half of the year.
Resulting in a range.
Double digit growth for the year.
Okay.
We have talked about 2021 as a year of growth investment and we have made a conscious decision not to scale back our planned investment despite increasing increases in operating costs.
We continue to manage costs prudently.
In addition in addition to the mitigating actions, we've taken to offset the macro headwinds we identified other areas of the business, where we have opportunities to take out costs.
Thanks to our strong balance sheet and financial performance.
We are confident we can continue to support our long term growth plans in the current environment, while delivering profitable growth.
As a result, we have raised our full year 2021 revenue and EBITDA guidance.
As detailed in the press release, we issued this morning.
We now expect full year 2021 revenue between 870 and $890 million.
And adjusted EBITDA of $84 million to $88 million.
Yes.
As we look ahead, we remain focused on executing against our strategic plan.
And delivering value.
<unk> lifetime brands stakeholders.
In closing our remarkable progress gives me confidence that lifetime is passed an inflection point, where we have achieved a new level of business performance in our core business.
Created meaningful value from our international operations.
And position the company to capitalize on contingent on continued profitable growth opportunities.
We are seeing sustained momentum across the business and executing well against our strategic initiatives.
With the addition of several plus 1 growth initiatives beginning in 2022.
We believe that lifetime is well ahead of the long term plan, we set out for ourselves in 2019 and updated earlier this year.
We expect the investments we've made in our business to continue to deliver deliver tangible results as we navigate the macroeconomic environment and react to the challenges and opportunities in the marketplace.
With that I'll now turn the call over to cloud. Thanks.
Thanks, Rob.
As we reported this morning net income for the second quarter of 2021 was $5.8 million or 26 cents per diluted share versus a loss of $4 million or <unk> 19 per diluted share in the second quarter of 2020. Adjusted net income was $6.1 million for the 2021 second quarter or <unk> 28.
Per diluted share as compared to an adjusted loss of $3.1 million or <unk> 15 per diluted share in 2020, a table, which reconciles. This non-GAAP measure to reported results was included in this morning's release.
Net income from operations was $11 million for the second quarter of 2021 as compared to income from operations of $4.3 million in the 2020 period.
And adjusted EBITDA, a non-GAAP measure that is reconciled to our GAAP results in the release was $96.7 million for the trailing 12 month period ended June 30th 2021. This represents a $5.8 million increase over the $99 million for the trailing 12 months ended in March.
2021.
Net sales in the 2021 quarter were $186.6 million compared to $150.1 billion for the 2020 quarter U S segment sales were up 34 million to 166.6 million. The increase came from category growth and increased market share in the kitchen, where product category.
Almost all product lines in the category achieved increases category growth reflects high demand from the continuation of consumers preparing more meals at home the reopening of brick and mortar customers and overall strength of our product lines.
Market share gains reflect the benefit of the Companys greater market share obtained in 2020 and further gains from 'twenty to 'twenty 1.
Tableware products increase came from all product lines, most notably our flatware sales from our new warehouse club program and dinnerware sales to reopen brick and mortar customers and e-commerce channels and home solutions on the core measurement product sales growth was offset by a decline for <unk>.
<unk> products, which did not anniversary 2000, Twenty's warehouse club program.
International segment sales were up $2.6 million to $20.1 billion on a reported basis.
Or 400000 income from U S dollars.
Sales of the company's European business.
Down slightly due to lower e-commerce sales offset by higher sales to reopen brick and mortar customers growth for the global trading business in Asia drove the increase in sales within the segment.
Gross margin for the 2021 quarter was 35, 4% and for 2020 quarter. It was 36, 1%.
Despite the declining gross margin dollars increased by 22%.
For the U S segment gross margin was 35, 8% in the 'twenty to 'twenty, 1 quarter versus 37, 6% last year.
The gross margin percentage decrease.
It was primarily due to a higher inbound freight costs, reflecting a worldwide shortage of shipping containers and other supply chain constraints.
The higher freight costs may persist and we may also experience increases in product cost due to commodity inflation incurred by our suppliers.
We anticipate mitigating.
We anticipate mitigating these high across to selling price increases and negotiation opportunities with our suppliers and ocean freight carriers.
Gross margin percent was also affected by product mix.
For International gross margin was 32, 3% in the 2021 quarter.
<unk> to 'twenty 4.8 in 2020.
The improvement is attributable to the 2020 period would be negatively impacted by higher reserves for slow moving inventory.
As well as customer mix.
Distribution expense for 2021 was 10, 1% of net sales.
10, 1% also into 2020 period.
But the U S segment distribution expense as a percentage of sales shipped from its warehouses was 9.4% and 9% for the 'twenty, 1 'twenty quarters, respectively.
The increase was a result of higher hourly labor rates and warehouse equipment and supply expenses, partially offset by the leverage benefit of fixed cost on higher sales volume.
For the international segment distribution expense as a percentage of sales shipped from its warehouses, excluding moving and relocation costs for the U K operations in 2020 was 17, 5% and 15% for 'twenty, 1 'twenty quarters, respectively.
The increase was primarily attributable to increased shipping costs for products shipped from our UK warehouses to continental Europe.
Selling general and administrative expenses were $36.2 million for the 2021 quarter versus $34.4 million in 2020.
U S segment expenses were $26.4 million in 'twenty, 1 versus $25 million last year.
The expense increase was primarily due to lower expenses in the prior period due to the company's savings initiatives in response to COVID-19 pandemic.
The increase was partially offset by lower allowances for bad debt.
And as a percentage of net sales SG&A expenses improved to 15, 8% in the 'twenty 1 quarter from 18, 9% in 2020.
This improvement is due to the leverage benefit of fixed cost on higher sales volume.
SG&A expenses for International segment were $4.2 million in the 'twenty, 1 quarter compared to $4.4 million for.
For the 2020 quarter the decline reflects the timing of <unk> expenses related to advertising and marketing.
Unallocated corporate expenses were $5.7 million in the 'twenty, 1 quarter versus $5 million last year.
The increase was driven by higher incentive compensation and reversal of temporary COVID-19, pandemic savings, partially offset by lower professional fees.
Interest expense was $3.8 million in 'twenty, 1 versus $4.2 million in 2020 quarter due to lower debt outstanding.
For taxes for the quarter from 2021 income tax rate was 25, 3%.
This rate.
There is from the federal statutory rate.
21% due to state and local income tax expense.
And an allowance of foreign losses net of a benefit related to share based compensation.
And for the 2020 quarter. The company recorded income tax expense of $3 million on a loss of 100000. This was due to the impact of permanent permanent items, including the non deductible goodwill impairment charge.
Looking at our debt and liquidity, our balance sheet and liquidity continued to strengthen at June 30, net debt was $218.8 million net.
Net debt to EBITDA ratio was 2.3 times and liquidity, which includes $33.3 million of cash plus availability under our credit facility was approximately $180 million.
And finally as discussed in the release and as Rob commented earlier, our financial guidance for the full year of 2021 now as follows net sales of 870 to 890 billion an increase of 13, 1% to 15, 7% over last year.
Adjusted income from operations of 55 to 58.
$58.5 million, an increase of 14, 8% to 22, 1% over last year. Adjusted net income of 28, 1% to $30.8 million an increase of 39 to 52, 5% over last year and adjusted EBITDA.
Of $84 million to $88 million, an increase of 8.7 to 13, 8% 13, 8% over last year.
This concludes our prepared comments operator, please open the line for questions.
And then finally, if you would like to ask a question. Please press Star then 1 on your pipeline.
Well take our first question from Linda Bolton Weiser with D. A Davidson. Please go ahead your line is open.
Yes, hi, good morning.
So does that flow.
A little clarification on diverse Tony.
Are you selling your whole day.
8.5% of USA, Inc.
Hi, Linda.
Sorry.
He has sold or 8.5%, yes, net 8.5% out of 100% of our stake.
100% of our stake used to be 30% of the company.
We've been looking to monetize we view it as a stranded asset and we've been looking to monetize it we were able to monetize 8.5% of our total stake.
Through some stock sales.
And we are looking to try to monetize more in the future. So we still own.
From the of the 30%, we own 91, 5% of that stake.
Okay.
Okay I understand thank you and then.
Can you just talk about on your gross margin impact in the quarter I mean, it was down year over year.
But you said pricing would start to make a little bit of a positive difference in the third quarter.
Do you kind of think that gross margin.
Year over year decline was that.
At the worst point in the second quarter or do you think the year over year decline might actually get a little bit bigger in the third quarter.
Okay.
Excellent question.
True.
I think that any 1 with analysts say there is a tremendous amount of unknown right now.
But we continue to react to the situation, we have already mitigated the inflationary cost of goods pressures through price increases.
And what will flow through.
Incremental price increases.
Through.
Dealing with increased shipping costs.
So without.
Further gyrations in the marketplace your assessment would be correct.
Okay.
You mean that maybe it might be a little bit bigger year over year in the third quarter.
Okay.
We should start getting the price and can we will start getting price increases to offset that the question is where.
The shipping costs will normalize and.
While our demand remained extraordinarily high.
We are focused.
And continuing to gain availability over cost.
So our shipping costs are a function of long term negotiated contract are you. There is not enough availability to fulfill all of our shipping cost through that Avenue, so we buy incremental shipping costs.
For lack of better description of what's called the spot market and that has increased dramatically, but we would rather and we still make margin dollars increase availability, which we view will give us a competitive advantage and gained more market share if the opportunity arises and that would have a negative impact temporarily on margins, but if any.
Steady state situation, you would see the second quarter, Bob most likely in mix aside.
Being the.
<unk>.
Low point and again as you know when we have big shipments in a given quarter 2 club, which is lower margin, but direct import.
That has an impact in the quarterly margin.
Okay..1 of my other companies today on the call said that they were actually seeing a slight.
Slide moving in the tightness from container availability are you starting to see that at all or are you seeing it does being the from bad.
I don't think anyone in this world can answer that question accurately.
Hi.
But I thought you said Rob.
No.
I mean, I don't think so we're.
We're not planning on that and EBITDA is will only benefit how about that.
Okay.
So I mean, clearly you had terrific sales growth in the quarter or did you feel that you've got any benefit from this day.
In the corner.
Yes.
I think our view is that.
People will spend stimulus dollars.
And people use our products every day.
So when there's more money in circulation they will spend more.
And we will benefit from that.
We.
Will.
<unk> continuously looked at when Theres, new round of stimulus and will advance.
Certain channels to make sure there's adequate inventory. So we don't get cut short because people kind of a pop and then it comes back down.
So the bill benefit that usually is.
First check.
Not on a continued basis.
Okay.
Okay.
Is there any way to go.
I mean why growth.
It's like predominantly consumption growth at the retail level or was there a fair amount of retails, Inc. Plenty.
Net.
So.
A lot of our growth has been driven just we picked up substantial market share.
Now we've seen in 2021.
You've seen a little pickup in foodservice value, which was nonexistent.
We've definitely seen pick up in 2021 and brick and mortar because.
Likely in the second quarter, because a lot of it was substantially closed a year ago.
And that's picked up at at <unk>.
<unk> expense of e-commerce, but generally overall, we've grown across categories.
Not just our feeling supported by NPD data.
And Thats true in driving continues to drive a lot of our growth.
It's not like in terms of.
Stock levels, a lot of our retailers, we were lit so to speak by certain retailers being out of stock and then all of a sudden needing to re plan a replenishing a tremendous amount in Europe. We did see that this quarter. So we were negatively impact.
Particularly in e-commerce, where our largest customer.
Didn't have room in their own distribution centers, so while we were out of stock.
On.
If you went online to buy the goods they couldnt replenish because theyre on warehouses were to stop so thats actually that logjam is broken and we benefited from that and particularly in July.
But in general.
You look at our total numbers is just sell through in continued sell through in a matter of fact as I mentioned in the second quarter, there was a decent amount.
Orders, we could not ship doing shipping issues. So we would have.
<unk> demand and the ability to ship a lot more but the shipping constraints hurt us Nonetheless, we put up very good numbers.
Okay.
Okay.
And then.
Just on your price increases that you're implementing.
Is that kind of broadly across the portfolio or are you really focused in on certain categories, where you think you've got the more pricing power.
And.
How is your effort similar or different from <unk>.
During the tariff period.
So on the first question is across all categories.
The there are 2 buckets of price increases.
Also focus on our higher where we can on cost side, but on the price side pricing side.
First which we knew earlier.
That was just inflationary cost of goods sold pressure.
And there is a difference in terms of the product categories on your cost inputs, because we focus on not trying to over shoot we really focus on the true math of sharing the true mat and therefore, we asked the only what is the price increase.
In.
Since that time and all the price increases have been focused on <unk>.
Shipping cost, which is across the board everything we do.
The second question was on tablets right.
The approach is basically the same so no.
Didn't uniformly impacts across all of our categories.
So in the category that a day.
Iron webcast, we would sit down and explain the math and why we need the price increase.
From the.
And the challenge I should say in the tariff wars.
When the tariffs were set at a certain level. They were raised they were lower they were put on they were taken off and it was very difficult to pass on a price increase.
In that environment.
Because no 1 knew where it was going to end up and particularly in brick and mortar retailer you don't want to reach stinker of everything and then have to change. It. So that's the way the ability to get price increases.
Whereas in this environment is well known and it's more of that there is a.
Agreed upon timeline when they go into effect.
Okay.
Okay. Thanks, that's helpful.
And then actually just my last question is just a little detail thing from from Larry.
And on your schedule of adjustments.
Reconciling net income to adjusted net income guarantees 2 items foreign currency translation loss.
Please go after 5 from.
Rather than a gain on change in ownership and equity method investments of 2 items, where 1 bad wherewithal to adjustments occurring income statement, which align with RCM, yes, it's in the equity and earnings line. So quickly what happened early during the quarter of.
<unk> is it a primary offering they sold.
To raise money approximately 10 million shares so because of that dilution, we actually had a we had a gain.
But then we had previously realized a loss on translation, which is comprehensive.
Comprehensive income. So now you have to re classes to what we call like the regular P&L will comp alluded, but we had a gain but the translation.
<unk> reclassified from 1 type of.
1 section in this income statement to another.
Separate from our Robinson ascribing to know about that we sold shares in early July although we sold shares using this.
<unk> need to raise money and they went to the public markets. So we piggyback on that and that's how we.
Scott liquidity partially.
In our vascular net.
Yes.
Oh I see okay gotcha.
Okay.
That's all my questions for now thank you very much. Thank you.
And we will take our next question is from Andrew.
<unk> with Sidoti <unk> Company. Please go ahead.
Yes. Good morning, guys. Thank you for taking the questions.
Just wondering with these.
These.
The latest news about all these.
Their enthusiasm.
Specifically delta variant.
Spiking as far as the cases.
Are you guys seeing.
Here as of late any noticeable changes in buying patterns.
Because of that.
Not really Anthony.
At the very end.
Our demand remains strong we haven't seen any impact.
In any points in 2021.
What we have seen related to not the variance with the shipping problem.
That increasingly.
Lesser capitalized companies are just people who hadn't invested in inventory are having gaps and allows us to step in so there are some opportunities are more forward looking.
And the major impact we've had on that from.
US has been more travel was returning and in that kind of stopped from a travel perspective. There is a very big foodservice show in August called NAV and that was just canceled yesterday NSO.
For us you'll actually see the immediate benefit that is cost savings right. So it kind of looks good but ultimately on that is not good or do you want to have things like that to be able to grow in the long term, but so the only impact we've seen is on travel.
Got it okay. Thanks for that and then.
So is it possible for you guys to quantify the level of price increases that youre doing anything in third and fourth quarters to just wondering if there's any way you can quantify that.
Haven't really and we're not at Liberty to do that we can say that the.
The impacts us are double digits and the cost price.
Price increases I should say are double digit.
Okay got it Okay and then.
The.
Certainly well publicized.
Pressures as far as shipping costs, and labor and all of that so looking at the back half of <unk>.
Your fiscal year here so.
Do you expect more of the impact could be on the gross margin versus distribution expenses or both I mean, how should we think about as far as we adjusted our models here for the back half of the year.
Guidance, we really haven't broken out.
Gross larger we've really focused on.
Operating income growth.
But I mean, the biggest impact is shipping explaining expense now.
And Theres a lot of mitigating line items, including on the cost of goods sold line, but the big impact pricing, obviously shows up in the gross margin.
Got it okay.
No. That's helpful. And then I guess lastly, you guys kind of just give us a little bit so Rob you talked about.
E Commerce.
Kind of necessarily being down as a percentage of the overall sales, but so I know, there's a lot of noise with all the.
Comparisons versus last year for sure, but ultimately where do you think that settles after the inc.
All of this kind of hopefully we get past this pandemic that would be but overall, how do you view that what are your thoughts on that and I tried to give everyone a little bigger because second quarter. It was a tough comparison.
Remembering brick and mortar substantial shutdown in the second quarter of last year right.
Things substantially went online so it is a.
Tough comparison, which is why I tried to give everyone. In my remarks, a broader view it continues to grow so while we were down in absolute dollars.
In the second quarter still year to date were up about 10%.
And the 6 months because e-commerce continues to grow.
And that doesn't include you know, which we don't report separately on.
Our shipments to omni channel, which.
<unk> grew over 160% in 2020 continues to be very strong.
So.
As a retailer who we position ourselves as you know Anthony to try to be wherever the consumer is going to shop.
So we want to be relatively indifferent, whether a consumer buy something online or buy something in brick and mortar.
And it is Jesse.
You need to make sure we have.
Adequate presence in all channels.
So whether it ends up it's going to be high growth, 16% right. So.
It likely 20% or north.
Because that channel continues to grow.
<unk>.
But it's hard to really handicap, where we're at and people. It's shown in 2021 net brick and mortars is strong right they come back.
Strongly.
Likely and if you look in Europe.
It's much more our business is much more oriented towards independence.
They've come back with a vengeance, which is great. It's great channel, we're very very big in that channel.
So people like to shop.
Likely the Varian if it continues in this direction will gamper those sales and people will go more online. So there will be some noise fluctuations I don't know, where we end up.
Got it okay. That's very helpful. Thank you and best of luck.
Thanks Anthony.
Okay.
From there are no further questions at this time I will turn the call back over to you Ralph for any additional remarks. Thank ashlee. Thank you.
Thank you everyone for joining us on this call.
We will be continuing Larry NII to speak at conferences and will either meet people there or.
We will look forward to everyone in our next call at the end of next quarter. Thank you.
Okay.
Thank you and that concludes today's program. Thank you for your participation you may disconnect at any time.
Okay.
Yeah.
Okay.
Okay.
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