Q1 2022 Express Inc Earnings Call
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Good morning, My name is Rob and I'll be your conference operator today at this time I would like to welcome everyone to the Express Inc. First quarter 2022 earnings Conference call.
All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session.
You'd like to ask a question. During this time simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question again press Star one. Thank you I'd now like to hand, the call over to Greg Johnson, Vice President of Investor Relations. Please go ahead.
Thank you Rob good morning, and welcome to our call I'd like to open by reminding you of the company's Safe Harbor provisions any statements made during this conference call, except those containing historical facts may be deemed to constitute forward looking statements within the meaning of the private Securities Litigation Reform Act of 1995.
Actual future results may differ materially from those suggested in forward looking statements due to a number of risks and uncertainties all of which are described in the company's filings with the SEC, including today's press release.
<unk> assumes no obligation to update any forward looking statements or information, except as required by law.
Our comments today will supplement the detailed information provided in both the press release and the Investor presentation available on our Investor Relations website.
In addition, you can locate a reconciliation of any adjusted results discussed in our comments to amounts reported under GAAP on our website or in our earnings release, we will also be providing financial comparisons to prior fiscal periods.
Prepared remarks today refer to 2021 unless otherwise noted with me today are Tim Baxter, Chief Executive Officer, and Jason Jud, Chief Financial Officer, I will now turn the call over to Tim.
Thank you, Greg and good morning, everyone.
Before I share our incredible first quarter results I'd like to introduce and welcome our new Chief Financial Officer, Jason Jud to his first Express Inc earnings call.
Jason is a seasoned well rounded an accomplished financial executive with a proven track record of delivering results.
The breadth of his experience adds both strategic and financial weight to our extraordinary leadership team.
He brings a depth of knowledge and a passion for retail that make him well suited to lead our financial strategy and be a steward of our company.
Jason joined express almost two months ago, and his perspective is already informing our path to long term profitable growth.
I'd also like to thank our president and Chief operating Officer, Matt Moellering for stepping in as interim CFO . These past six months.
But Jason in place that will once again focus on guiding our stores supply chain planning and allocation technology and legal teams.
One of the most important elements of our expressway forward strategy is consistent exceptional execution and there is no better executive to ensure that and Matt.
Turning to our first quarter results.
Positive comparable sales gross margin expansion and SG&A leverage all exceeded our expectations.
We delivered positive comparable sales of 31% and drove double digit positive comps in every major category and in every channel.
These incredible results and the continued acceleration of our business were driven by a combination of factors.
Outstanding product.
Compelling brand purpose the power of our styling community stronger connections with our customers and consistent exceptional execution.
We drove gross margin expansion of 640 basis points, despite the negative impact of $6 million of expense associated with ongoing supply chain challenges.
Our average unit retail increased 20% and for the second consecutive quarter. We recorded the highest number of active loyalty program members in our company's history.
Yeah.
In a very difficult apparel retail environment Express is winning.
We're selling more elevated product to more loyal customers at higher margins and our performance in the quarter is tangible evidence of the momentum that the right strategy the right product and the right team all working in concert can create.
We continue to advance each one of the four foundational pillars of our expressway forward strategy.
Product brand customer and execution.
Let me take you through some of the results we've achieved and what is still to come.
I'll start with product.
We set out to bring greater balance and versatility to our assortments, reflecting a more modern approach to building a wardrobe.
Our express edit design and merchandising philosophy is working we are winning in the classifications, we've long been known for and gaining market share in some of the most significant volume driving categories.
Our product has never looked better and we achieved double digit positive comps in every major category.
We achieved a number of first quarter best in recent history, including our men's business in total men's suits men's polo women's jackets, and women's and men's denim.
Okay.
Modern tailoring continued its resurgence with comps up across the board.
Women's jackets were up 117% in men's suits were up 78%.
Denim had a 23% comp increase and women's was particularly strong.
The express essentials body contour women's collection generated nearly $20 million in sales delivering its best ever quarter.
Express Essentials for men were also strong with polo's increasing 75%.
Our second pillar is brand and.
And we delivered another exceptional quarter of increased brand tracking measures social media engagement and positive customer feedback.
Google organic brand demand increased 20% in the first quarter and was up for the 12th consecutive months.
Our first quarter brand campaign made to express you generated over 285 million impressions across all digital platforms and our video content in the quarter drove another 215 million views across platforms.
Express is transforming from being known as a store in the mall to a brand with a purpose powered by a styling community.
The express styling community is not only one of the most dynamic aspects of our brand. It is also one of the most authentic and organic ways in which our brand purpose comes to life.
We create confidence we inspire self expression.
We do it by editing the best of now for real life versatility.
And everyone in the express styling community as a part of that.
Customers Associates style editors content creators Influencers and brand partners all play a role.
Members of the express styling community interact with each other in the physical and digital worlds.
Our brick and mortar and online stores get over 300 million visits each year and of course, many customers engage in both channels.
Building activating and amplifying the express styling community is one of our key 2022 priorities and it will help us deliver the best digital and the best physical customer experiences.
Our stores are the place where our community comes together to see try on and style our product in real time.
We hosted over 200 store events in the first quarter at.
Many of these our style editors are brand ambassadors invited their followers to join them and their ability to broaden the reach of our brand purpose through their social media platforms is evident and powerful.
Okay.
We also see the seamless exchange between physical and digital engagement when we simultaneously host an event in store and stream it online.
These digital livestream events in the first quarter nearer drew nearly 2 million views across all social platforms.
Our stores are an essential part of our styling community and an important driver of sales growth.
But they are not yet where we want them to be and we have already begun to re imagine the customer experience through a pilot program in select stores.
The initial results are encouraging.
And these stores are significantly outperforming the rest of our fleet with higher sales and a better customer experience.
We will refine and perfect. The operating model in these stores as we expanded across our fleet and we are already applying the most effective elements and additional stores.
The combination of knowledgeable associates and consistent exceptional execution will make it possible for us to fulfill our brand purpose for every customer in every store every time.
We will continue to renovate and refresh our stores to elevate the customer experience and present, a more consistent brand identity across our fleet.
We have already updated 20 stores and we will update a total of 70 by the end of this year.
These enhanced stores are achieving consistent sales increases, but there is still much more to do before all of our stores fully reflect who expresses today.
Our third pillar is customer.
We continue to effectively engage existing customers and acquire new ones.
Total customers were up 17% and spend per customer increased 13%.
Since its relaunch in Q1 of last year, our insider loyalty program helped to grow our styling community, bringing in $3 4 million, new customers and reactivating $2 8 million lapsed customers.
Loyalty program members are our best customers, making over two more visits and spending over twice as much per year is non loyalty members and as I. Previously mentioned, we ended the quarter with the highest number of active loyalty members in the company's history.
Our fourth pillar is execution.
Solid execution contributed to achieving double digit comps across all channels and I'll share some highlights.
We drove a 21% increase in e-commerce demand, including higher traffic and an increase in average order value and are on track to achieve our goal of $1 billion in e-commerce demand by 2024.
We introduced enhancements to our online checkout process and improved our buy online pickup in store experience to let customers more easily shop our inventory.
In the coming months, we will enhance personalization and make the checkout experience even more streamlined.
We will provide even more robust content across all of our digital platforms and keep improving our multichannel execution.
Our mobile App now has $2 6 million users and we drove a 30% increase in demand and a 33% increase in traffic with these users.
These are among our most engaged customers, making five more visits and spending over $300 more each year than customers, who only shop on our web site or in one of our stores.
The majority of App user are also express inside of our members and they drove over 90% of the App transactions.
Our retail stores had an outstanding quarter, delivering a 45% comp increase.
We drove a 23% increase in average unit retail and according to our third party data our store traffic consistently outpaced the mall apparel average by over 20%.
Express edit stores are strategically located in high traffic opinion maker destinations and diversify our brick and mortar fleet.
These stores acquire new customers reactivate lapsed customers and sign up express insiders at higher rates than the balance of our fleet.
And boost digital sales and the surrounding Zip codes.
We recently opened a women's only express edit store at Plaza, Frontenac and St. Louis and it is already our most productive of these formats to date.
We plan to open stores in Soho and flat iron in Manhattan, and on Newbury Street in Boston in the coming months and we also expect to open our mens only store this year.
Okay.
Our outlet channel delivered a positive 30% comp and achieved its biggest first quarter ever.
With Assortments fully aligned to the express edit design and merchandising philosophy, we are achieving higher average unit retails, while giving the customer even more compelling value.
Our up West brand also had a remarkable quarter with sales growth of 68%.
As our digital sales continue to accelerate we are also expanding our physical store footprint.
We've already opened four new stores this year, bringing the total to 11 and we plan to open four additional stores in 2022.
These stores attract new customers and accelerate digital sales and surrounding Zip codes.
Later this year, we will unveil a partnership with a prominent national retailer that will expand the awareness and reach of up west more quickly.
West continues to gain momentum and is well positioned to be a growth engine for our company.
In addition to driving incredible results in the first quarter. We also launched our ESG mission expressed together to guide and set clear goals for our commitments and actions across diversity equity and inclusion, giving and mentoring and sustainability.
Our <unk> mission is to seek out respect and embrace different experiences approaches and points of view.
The team of the Eni stewards leaves the development of our content education discussion and communication around a wide range of topics.
Our giving and mentoring mission is to offer opportunities and resources for every generation.
We accelerated our express Dream Big project through our partnership with Big Brothers Big Sisters of America, and have already surpassed our goal of raising $1 million to support their big Futures Mentorship program.
Within sustainability, our conscious sourcing and product mission is to make better choices through products and practices.
As one example, we have set a goal to conserve 50 million gallons of water by 2026.
Now, let me turn the call over to Jason who will provide the detail on our first quarter results and share our improved outlook for 2022.
Thank you Tim.
These past two months I have become grounded in our corporate strategy and transformation agenda and how they connect to our financial performance.
Is very clear to me that express has a bright future.
We'll be refining our long range plan to best deliver on our strategy and achieve our objectives.
Rebuilding our capital structure to strengthen our balance sheet optimize our cost of capital and increase our ability to drive greater shareholder value now.
Now, let me review, our first quarter results and provide a high level outlook on the second quarter and an improved outlook on the full year.
As Tim indicated first quarter consolidated comparable sales growth gross margin expansion and SG&A leverage all exceeded our outlook net.
Net sales were $451 million.
An increase of 30% and consolidated comparable sales were up 31% total retail comps increased 32% and outlet comps were up 30%.
These results were achieved despite headwinds from inflation monetary policy geopolitical events and ongoing supply chain challenges and even with a significant decrease in our promotional activity we.
We generated gross profit of $132 million with a gross margin rate of 29, 2% an increase of 640 basis points.
Merchandise margin expanded by 20 basis points, despite the negative impact of $6 million of expense associated with supply chain challenges without this impact the expansion would have been 160 basis points.
For the balance of the year, we expect an incremental $7 million to $10 million of logistics expenses.
This is built into our outlook.
Buying and occupancy expenses leveraged 620 basis points.
Our expenses were relatively flat and the leverage was driven by significantly higher Q1 sales.
SG&A expenses were $141 million, leveraging 320 basis points.
Our operating loss was $9 million compared to a loss of $41 million last year.
Our diluted loss per share was <unk> 18.
On a GAAP basis compared to a loss of <unk> 70 in 2021, excluding the impact of the $5 million.
$5 million, resulting from the recording of a valuation allowance against our deferred tax assets, our adjusted diluted loss per share was headset.
Our effective tax rate was 4%, which reflects the impact of the aforementioned valuation allowance. Excluding this impact our effective tax rate would have been approximately 44%.
Turning to our balance sheet, our inventory was up 40% compared to last year, reflecting a 25% increase in unit investment.
Let me walk you through the reasons for this.
First we have taken strategic actions to mitigate supply chain challenges and ensure that our inventory arrives on time.
Second there are underlying cost increases due to improve quality and the product distortion to higher priced categories and inflation.
As evidenced in our expanding margins, we have more than offset these cost increases in our realized average unit retail.
Third we packed and help holiday products that arrived late and because it is aligned to our outlet assortment strategy. We are confident it will sell through at regular prices in fall 2022.
We continue to ensure that we are well positioned on both of the newness and the composition of our inventory.
Our inventory levels will remain elevated in the second quarter and move closer to parity with sales growth in the back half of the year.
Our balance sheet at the end of the first quarter continues to reflect a $52 million cares Act receivable, which we now expect to receive in 2023.
Our borrowings at the end of the quarter were $211 million of which $115 million was drawn against our existing asset backed loan facility and the remaining $96 million.
It was drawn on our term loan.
Before turning to our outlook I will reiterate that we achieved a 31% comp despite the considerable headwinds we and the industry experienced this comp our gross margin expansion and SG&A leverage were all above our expectations.
Looking ahead, we considered our year to date performance and the strength of our product brand customer and execution advancements balanced against the ongoing supply chain challenges macroeconomic pressures geopolitical events and other uncertainties that may impact our business.
Our outlook includes expectations for the second quarter and the full year, let me start with Q2.
Compared to the second quarter of 2021, we expect to deliver the following comparable sales to increase mid single digits.
Gross margin rate to increase approximately 100 basis points and SG&A expenses as a percent of sales to delever approximately 100 basis points. This includes incremental investments in technology higher labor costs and inflationary pressures.
Our full year outlook has improved based on the strength of our first quarter results and the ongoing momentum in the second quarter.
Compared to the full year of 2021, we expect to deliver the following.
Comparable sales to increase 8% to 10% grow.
Gross margin rate to increase at least 100 basis points.
SG&A expenses as a percent of sales to be approximately flat.
Adjusted diluted earnings per share of <unk> 14 to 20 <unk>.
And capital expenditures of $50 million to $55 million.
We are well positioned to achieve our expectations for continued growth and significantly higher operating income in 2022. We are also on track to achieve our stated goals of mid single digit operating margin in over $100 million in profit by 2024.
I am delighted to be here and I'd like to thank everyone for the warm welcome and comprehensive introduction to our business as I said at the top of my remarks Express has a very bright future I will now turn the call back.
Thank you Jason.
We had a terrific first quarter.
Positive comparable sales up 31%.
<unk> digit positive comps in every category and in every channel.
640 basis points of gross margin expansion.
AUR up 20%.
The highest number of active loyalty program members in our history.
Our physical and digital experiences advancing.
Our brand purpose, taking hold and our styling community expanding its reach and its impact.
Our transformation is well underway.
I am proud of what we've accomplished.
I am energized by our momentum and we have increased our annual outlook to reflect that.
Thank you all and now we'll take your questions.
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At this time I would like to remind everyone in order to ask a question Press Star then the number one on your telephone keypad.
And your first question comes from the line of Marni Shapiro from retail tracker. Your line is open.
Hey, guys, congratulations on a fantastic quarter and start to the year. So I have one kind of baseline question and then one forward looking question it looks like block.
Blocking to Easter as there is a base of business that I'm guessing the inventory inventory turns a little slower denim polo's men's shirts, probably parts of your body contour and then there is parts of the business that are turning very fast fashion.
I'm curious if I'm seeing that right and is the plan to keep that sort of baseline a little bit more in stock moving slower and then a portion of it moving much faster.
And if this is the case you've been in a situation at least this first quarter, where there's been a lot of sell out and disappoint to customers in the store, but on the other hand.
Breeds, a lot of excitement and I must have it so how do you balance being in stock, but also leaving her Hungary with edgy.
As you look going forward.
Well.
As usual Marni your observation is correct.
No.
A significant part of the inventory investment that we made was in core product to ensure that we would be well positioned and in stock in core categories like denim.
Like men's suits men's dress shirts women's body contour women's denim.
At men's polo's, so yes, we have made.
Any significant investments to be sure that in those core categories. We are in stock and serving the customer we have turned fashion to your point.
At a very fast clip and both mens and womens and had sellouts on some of our best product and that does create urgency and it is it is part of what has allowed us to pull back so significantly on deep storewide and site wide promotions in fact in the first quarter, we had zero.
Storewide site wide promotions, which is the first time.
Years that we have come through an entire quarter that way. So we do we.
We do expect to continue to build the sort of fashion pyramid, where we are in stock on our core categories. The core volume driving categories and fashion is.
Theres less stepped in fashion, however that being said.
We also know that we actually can sell more depth in our key fashion products and as we move into the back half of the year, you are going to see greater depth behind the key fashion messages.
So that we can really capitalize on the demand that we're seeing in our fashion product as well.
That makes and I guess following up on that if I think about your spring season, you have those core items that we talked about you have Steve really high fashion items, So take a lavender blazer for example.
And then you have what I would call sort of the in between fashion items. So maybe a one shoulder rus dress, which probably has a longer life than the lavender blazer, but not as long the life as a pair of jeans. So the items that you are putting some depth behind does does it fall in that middle lean and not the the riskiness of the fashion, but sort of that mid lean fashion.
It depends to be perfectly honest.
I would say at the highest level yes.
We see the most powerful sell throughs on the product that is featured in our windows.
In our hot zones in stores that same product is being.
Pushed through and highlighted in all of our digital media and marketing and so those are the products that we actually see the strongest sell throughs on and so we actually believe we can sell greater depth in both the lavender blazer and the example that you gave and potentially the one shoulder.
That one shoulder top.
So I guess the answer is it depends but the.
The planning and allocation team has worked really closely with the merchandising team to identify those items upfront and build the depth of <unk>.
Accordingly.
I think we've made incredible progress on that and you will begin to see that progress as we move further into this year.
The thing we have done a hydro Bonnie this is Matt.
We have done is.
We have focused on reducing choice count to create a much more focused assortment and by reducing the choice count we cannot invest in more depth in the items, we really believe.
And the other thing Marty as the team has also done a great job of identified to your point the <unk>.
Bruce dress may have a longer lifespan than the lavender blazer, but that gene has a longer the longest lifespan ban of all three and the teams are actually working very closely together to identify exactly how many weeks we expect the product.
To be at full price.
Before we before we take the markdown and move on and so the depth is also determined by the number of weeks, we expect that product to live in our full price assortments that makes sense fantastic I'll talk to you I will take the rest of it offline best of luck for the next for the summer season.
Great. Thanks Marni.
Your next question comes from the line of Eric <unk> from SCC Research. Your line is open.
Good morning, congratulations on a solid start to the year.
Thanks, Eric let's talk over.
Could you talk.
About the opportunity here in accessories I know you guys is on Japan Tastic job.
Is that slot and what do you think that can go.
Yes, one of the key strategies and our <unk>.
<unk> merchandising team is actually add an accessory.
And we have made great progress in both mens and womens on advancing our accessories assortments to be much more in line with what we've accomplished in apparel, but to be honest, Eric we still have work to do in that category.
So we are.
Driving growth in accessories in total.
We've seen strength in certain categories in both men's and women's and other categories have been more challenging categories like men's neckwear. For example have continued to be more challenging, but we have the opportunity.
To really grow the accessories business, because so few of our customers today are actually buying accessories from us. So we have an intense focus on the shoe category in both mens and womens.
In men's we have.
An intense focus on underwear.
We are selling jewelry in both mens and womens and have the opportunity to both expand our assortments and drive considerably more volume.
Within the jewelry categories. So as we look forward.
Going to begin to see.
Even better results in accessories than we're seeing right now in our apparel businesses as we continue to focus on adding and accessory with each one of our <unk>.
Purchases.
Great.
Youre mens suiting business has really been impressive as you see people coming back from work to what is.
What are they doing in terms of suiting you have a number of different patterns.
The ability to mix and match the suiting and what have you been seeing in terms of trends with that and where do you think thats going to go.
Well I think our as.
As I said in our prepared remarks, our suiting business has been explosive and.
We have an extraordinarily well balanced assortment in men's suiting. So we are very very well positioned in core.
Suits and Navy black grey.
And our key fabrication.
Modern tech.
We're adding color.
In in modern Tech and so Youll continue to see us build out our core modern tech business. We're also expanding the modern tech business to include.
Things like double breasted jacket in in Black Navy and Greg for example, so.
That core business.
<unk> is a very very powerful part of of what has driven our success, but we have also had incredible success driving fashion and men's suits.
And it is that balance I believe that has made this such an explosive category for us. So we are servicing.
A guy who's coming in and looking to build our core.
Professional wardrobe, we're serving consumer who is looking for a suite for a specific occasion or an event and we're serving.
Serving a fashion consumer who understands the versatility that a suite provides when you can break up the pieces.
But also just loves.
<unk> to our suite.
So there arent many retailers that can say that they are simultaneously selling a core navy suit and a hot pink suit for men and that is absolutely whats happening right. Now we've also built within the separate component.
Different pant blocks. So we've had great success with drawstring pants that work back to our modern tech suits, we've had fantastic success with pleated crop self belted pants that work back to cotton suits for example, so.
The breadth of the assortment and suits as part certainly part of why we're winning.
We're also winning because we are appealing to such an incredibly broad range of consumers in that category.
One last one here Youre anniversarying the rollout of the updated.
So the express program in terms of the customer program.
How are the new customers.
Quickly are they ramping and how in terms of productivity is at the same level of productivity youre seeing from the prior.
E program customers.
I assume youre talking about the insider program right, Eric I, just want to be clear I'm, sorry, yes, yes, okay great.
Well, we're obviously seeing phenomenal success, there and we continue to bring an extraordinary number of new customers into the program and as I mentioned for the second consecutive quarter. We ended the quarter with the highest number of active loyalty program members.
And the answer to your question is yes, we're actually seeing.
Not just the same behavior that we've seen out of our loyalty customers in the past, we're actually seeing even better behavior. They are shopping more frequently they are spending more money.
So we're very excited about the the number of people that we have in the program.
And the.
The sustainability of that program as we as we go forward, we've continued to enhance to provide enhanced benefits to our inside our loyalty members and we will continue to do that so they are they are our best customers and the reason, we're winning is because we're treating them like that.
Great. Thank you and good luck for rest of the year.
Eric.
And your next question comes from the line of Steve Marotta from CL King <unk> Associates. Your line is open.
Good morning, Tim, Matt, Jason and Greg I, just have a couple of quick questions. First is the hold over inventory from holiday that you mentioned was that originally aimed at full price or was it originally aimed at outlet.
Yes, the pack and hold was originally aimed at full price and just to be very clear the product that impacted held.
Is product that we brought in with extended cell selling life associated with it but the product got delayed so as an example.
If we bought a dress and we were planning on selling it for 12 weeks in stores.
It only came in and allowed us for four weeks of sale in store, we packed and held a full size runs of that product and there had to be two things that were true in order to pack and hold the product number one it has to have a high sell through for the product that did get out to the stores on the website a number to it.
To fit into the assortment architecture for <unk> next year, and we are very clear with the teams on both of those and Thats why we have high confidence, we'll be able to sell that at full price next year.
Okay. That's very helpful and Tim could you talk a little bit about your expectations for the balance of the year from a promotional environment standpoint, I'm sure that your plan.
Very controlled promotional environment promotional internal plan, but can you talk about what you expect from competitors and how flexible you feel from a reactionary standpoint in the back half of the year.
Sure.
Obviously.
We are operating in a <unk>.
<unk> apparel retail environment.
<unk> been clear over the past couple of weeks.
And we have seen an increase a pretty dramatic increase for many of our competitors in site wide in storewide promotional discounts going back to sort of where we were pre pandemic, where we're starting to see 30 off your entire purchase 40 off your entire purchase.
Fairly regularly from.
Some of our competitors.
But we are uniquely positioned and I do not anticipate that we will we will stray from our promotional strategy and our promotional strategy is to absolutely eliminate those deep storewide and site wide promotions, we did that very effectively and we.
We've done that very effectively for several quarters, but.
First quarter was the first quarter, where we've had zero days of store wide and site wide promotions.
And I do not anticipate.
Straying from our promotional strategy in spite of the promotional strategy that we're seeing from some of some of our competitors.
We are winning because our product is right and the value of our product is evident to the consumer.
Thats not going to change as we go forward and so we will continue to run targeted promotions.
I have said repeatedly we are not we are not pulling away from promotions entirely we are going to run strategic targeted promotions on key categories in.
In some cases those promotions will be.
To acquire customers in some cases, those promotions will be to drive a category, where we are trying to gain significant market share and get customers into our product in that category in some cases, it will be to move through inventory, where we believe we have too much inventory.
That will obviously always be the case as well but.
We have stayed committed to our strategy and we're going to continue to stay committed to our strategy. We will of course react accordingly to to the promotional environment. If it begins to impact.
Our anticipated results, but based on what we accomplished in the first quarter. When all of this was happening around us I don't I don't expect that to happen I think it's a really interesting point.
Steve and we do believe we have pricing power, where others may not to Tim's point, we've gotten our fashion right and when you get the fashion right Theres very little price sensitivity. Secondly, we have added significant quality back into our products and because we have done that we're able to compete on.
<unk> and not simply price with commodity type items and third.
We talk about versatility adds value.
Offer a broad array of products from denim to suiting and we have credibility with the customer in all of these categories and when the customer can mix and match product that we offer and take quality product and mix and match with other items it creates value for them and they are willing.
To pay a higher price.
Terrifically helpful. Thank you I'll take the balance offline.
Thanks, Steve.
And there are no further questions at this time, Mr. Baxter I turn the call back over to you for some closing remarks.
Thank you all for joining us this morning.
This concludes.
Today's conference call. Thank you for your participation you may now disconnect.
Okay.
Okay.
Okay.
<unk>.
Okay.
[music].
Yes.