Q2 2023 Aritzia Inc Earnings Call
[music].
Thank you for standing by this is the conference operator, welcome to our Ritziest second quarter 2023 earnings call.
As a reminder, all participants are in listen only mode and the conference is being recorded.
After the presentation there'll be an opportunity to ask questions to join the question queue. You May Press Star then one on your telephone keypad should you need assistance during the conference call you May signal, an operator by pressing Star then zero.
I would now like to turn the conference over to Beth Reed Vice President Investor Relations. Please go ahead.
Thank you Ariel and thanks for joining <unk> second quarter fiscal 2023 earnings call on the call today I'm joined by Jennifer Wong, Our Chief Executive Officer, Todd Angle, do our Chief Financial Officer, and Brian Hill, Our founder and Executive Chair following prepared remarks from Jennifer and Todd there will be an opportunity to ask.
Please note that remarks on this call may include our expectations future plans and intentions that may constitute forward looking statements such outlook is based on estimates and assumptions made by management regarding among other things general and economic and geopolitical conditions and the competitive environment as well as further.
COVID-19 resurgence as actual results may vary we would refer you to our most recently filed management's discussion and analysis and our annual information form which include a summary of the material assumptions as well as risks and factors that could affect our future performance and our ability to deliver on these forward looking statements our earnings release.
The related financial statements and the MD&A are available on SEDAR as well as the Investor Relations section of our website at our Red Sea of Dot Com I'll now turn the call over to Jennifer.
Thanks, Beth good afternoon, everyone and thank you for joining us today, our performance in the second quarter of fiscal 2023 highlights the ongoing sales momentum that we are seeing across our business demand from new and existing clients continues to exceed our expectations and.
They're a much loved everyday luxury experience resonates across all geographies and all channels are better than anticipated sales results. In Q2 were led by exceptional strength in the U S, where both new and mature markets outperformed E Commerce growth also meaningfully exceeded.
Our expectations underscoring the success of our multichannel business.
In Q2, we delivered net revenue of $526 million, an increase of 50% from last year fueled by our business in the U S, which continues to grow at a phenomenal pace, increasing 80% from last year.
In Canada, we grew by 29% with strong double digit comparable sales growth and the benefits are reopened boutiques in eastern Canada.
And in E. Commerce, we saw impressive growth of 33% on top of 49% last year. Our outstanding sales growth continues to be driven by new client acquisition as more people discover and become loyal to the Auryxia brand.
Our unprecedented growth in the U S was fueled by exceptional comp store sales as well as the progress we made on our geographic expansion strategy in Q2, our retail business surpassed our expectations, increasing 60% from last year, we opened three new boutiques in the quarter.
Two a tremendous client response, two of which were in new markets, Orlando, Florida, and Atlanta, Georgia. We also opened in Palo Alto expanding our presence in northern California, where we now operate four boutiques. We remain extremely pleased with the early results we're seeing in our neighbor.
Cheeks and enter new markets. The ongoing success of our real estate strategy enhances our already premier boutique portfolio and positions there with CEA for continued growth into the future.
Our ecommerce business continues to be driven almost entirely by traffic growth led by the U S where traffic increased more than 50% from last year to maintain our momentum we're continuing to add new and improved features and functionalities to auryxia dotcom, including you.
As your generated content, we also signed a multi year contract with the personalization platform. This will allow us to drive deeper loyalty and deliver an enhanced client experience, including tailored product discovery.
In Q2, we continued to see key programs and clients favorites drive our strong demand selling in our professional fashion and tailored assortment continued to increase as we maintained our momentum in lifestyle apparel.
We also continue to invest in the Super Puff brand expanding the assortment across styles and colors and we're installing a dedicated super world experienced in select stores, which will bring the brand to life in a new and immersive way for our clients our multi brand business model continues to enable.
Well as to provide our clients with beautiful products for all aspects of their life.
The combination of our boutique expansion and beautiful product collection continued to propel our brand awareness.
The Auryxia brand is resonating incredibly well with our clients who have been actively posting about us on tick tock generating 2 billion views to date, our clients are doing the talking for us and to our own social and Influencer strategies. We are amplifying what they are already say.
Hey.
In Q2, we made further progress on our path to getting famous in the U S where client growth has increased more than 300% in the past two years, we finished the quarter with more clients than ever before.
Like all global businesses, we continue to navigate supply chain challenges.
Last year, we were unable to procure all of the inventory we required due to supply chain disruptions, which did affect sales in Q2, we strategically pulled forward winter buys into fall and selective spring buys into winter in order to mitigate supply chain risks.
And ensure our ability to meet the robust demand for our product.
We are confident with the composition of our inventory, which is concentrated in client favorites and we believe that we are appropriately positioned to capitalize on the strong sales momentum we are experiencing.
Looking ahead, we are encouraged by moderating air and sea rate as well as improved transit times.
<unk> freight timing is now approximately seven to eight weeks down from 11 to 12 weeks at the peak, there's still roughly double our pre pandemic range. We expect freight times will hold steady through the holiday season, and likely decline going into next year.
Yeah.
Our outstanding performance has helped us to continue attracting a team of world class talent, we filled a multitude of key positions across all areas of the business and we are continuing to invest in talent, particularly across creative E Commerce marketing and technology as we build the infrastructure that will allow us to.
Capitalize on our growth strategies.
While the competition for talent remains challenging we are extremely competitive due to our incredible employment brand.
Industry, leading wages and benefits and inspirational workplace environments.
This quarter I visited many of our boutiques across Canada, and the U S. As always I was impressed with our leadership and the proven ability of our style advisers to progress their careers much like I did myself, we are growing from within and hiring and developing amazing talent their passion for its yeah and then.
Z optical representation of our brand is truly incredible I am thrilled with the great momentum that I saw not only among our people, but in our busy and energetic boutiques as well.
Our beautiful products aspirational shopping environment and exceptional service are clearly resonating with clients.
Our commitment to our people and the planet remains a top priority we published our inaugural ESG report in Q2, and our first United Nations Global compact communication on progress against our ESG initiatives. We also joined as a member of the good casually or standard.
And continue to prioritize incorporating certified sustainable raw materials in our product collections.
Over 60% of our fall and winter styles will contain a sustainable attribute.
We also continue to focus on supporting the people we serve across our communities. This year, we observed and commemorated orange shirt day, two of which he is the first ever collaboration with Athena Picker, who was a salish artist from quantum first nation, we were proud to amplify indigenous voices.
Through the gifting and sale of Orange shirts, featuring artwork by Athena with all proceeds going to Orange shirt Society.
Demand for our brand remains exceptional and we continue to successfully navigate a dynamic macro backdrop.
We are closely monitoring our business and the external environment. We are as always focused on the long term and we are investing in our strategic initiatives and the infrastructure required to scale our business for years to come.
Now I'll pass the call over to Todd, Thanks, Jennifer and good afternoon, everyone.
We delivered another strong quarter of financial results again exceeding our own expectations.
Driven by robust demand for our product across all geographies and channels, particularly in the United States, where the riskier brand continues to grow at an unprecedented pace.
For the second quarter, we generated net revenue of $526 million, an increase of 50% from last year and achieved comparable sales growth of 28, 3%.
This outstanding growth was the result of several factors.
First we continue to see exceptional growth in the United States with net revenue of $263 million in the quarter, an increase of 80% from last year.
Our business in the United States accounted for 50% of net revenue in the second quarter compared to 42% last year and 29% two years ago.
This sustained momentum reflects the significant acceleration in our U S client base as more clients discover and become loyal to the Auryxia brand.
Second our retail revenue in the second quarter was $352 million.
An increase of 60%.
This was led by growth in the United States, where we saw exceptional comparable sales as well as outstanding performance in our new boutiques, which continue to exceed our sales and payback expectations.
In Canada, we saw strong double digit sales growth in our comparable boutiques.
Retail revenue also benefited from 34 reopened boutiques in Eastern Canada. There were closed for one third of the second quarter last year.
Third our e-commerce business delivered another impressive quarter with net revenue of $174 million, an increase of 33% on top of a robust 49% increase in the second quarter last year and 82% in the second quarter two years ago. During the pandemic. This represent.
A 53% three year CAGR.
On top of our accelerating retail business, we saw strong e-commerce trends across all regions with growth predominantly driven by higher traffic.
We delivered gross profit of $220 million up 41% from the second quarter last year.
Gross profit margin was 41, 9% in the quarter declining 270 basis points from 44, 6% last year the.
The decline was driven by discontinued Covid relief subsidies and higher freight and distribution center costs as well as normalized markdowns compared to last year when inventory levels were abnormally low.
The above pressures were partially offset by leverage on occupancy and depreciation cost.
SG&A expenses in the quarter were $147 million or 28% of net revenue compared to 26, 3% last year.
The 170 basis point increase reflects additional investments in retail talent to ensure we continue to deliver exceptional client service.
And ongoing investments in people technology, and marketing initiatives to fuel, our accelerated momentum and to ensure our future growth.
Overall adjusted EBITDA in the second quarter was $83 million, an increase of 13% from last year.
Adjusted EBITDA was 15, 7% of net revenue compared to 28% of net revenue last year.
We are extremely pleased with the sales momentum in our business, allowing us to invest in our long term growth despite transitory cost pressures in the second quarter.
Okay.
Inventory at the end of the second quarter was $455 million.
Compared to a $182 million at the end of the second quarter last year.
We had extremely low inventory levels in the back half of last year, which affected sales.
This season's inventory was planned at an 83% increase to last year in order to meet or exceed our sales targets.
To mitigate supply chain risks inventory was booked earlier for our fall winter buy.
And on top of that as an extra precautionary measure we pulled forward selective spring and summer product.
Overall, we are comfortable with our inventory position and for the season, we expect normalized markdowns no greater than pre pandemic levels.
Since the implementation of our CIB on January 12, and through October 11th we repurchased one 7 million shares returning $69 $2 million to shareholders. We will continue purchasing shares opportunistically throughout fiscal 2023.
Our liquidity position remains strong at the end of the second quarter was $65 million in cash and zero drawn on our $175 million revolving credit facility.
Turning to our outlook the positive momentum in our business has continued into the third quarter.
As such we now expect net revenue for the third quarter to be in the range of $565 million to $590 million Rep.
Representing an increase of approximately 25% to 30% compared to last year.
This reflects continued strength in the United States across both our retail and e-commerce channels as well as a strong recovery of our business in Canada.
For the full year, we have increased our net revenue expectation to a range of <unk>.
2.022 point over $5 billion from our previous outlook of 1.8 75 to $1 9 billion.
The new outlook now represents growth of approximately 34% to 37% from fiscal 2022.
In addition to the six new boutiques and one boutique repositioned through the end of the second quarter, we plan to reposition the additional four boutiques in the third quarter three in Canada, and one in the United States and opened two new boutiques late in the fourth quarter.
Both in the United States.
Our gross profit margin outlook is unchanged and we continue to expect it to decline approximately 100 to 150 basis points compared to last year, reflecting ongoing impacts from global supply chain disruptions and discontinued COVID-19 really subsidies.
We continue to expect SG&A as a percent of net revenue to increase approximately 50 to 100 basis points compared to last year as sales momentum continues we are making ongoing investments in our infrastructure to fuel our accelerated momentum and to enable our future growth.
Over the long term as our mix shifts towards the United States and E Commerce.
And E Commerce, our leverage is expected to expand.
In summary, we're extremely pleased with the strength of our business, particularly with our momentum in the United States and remain optimistic about the balance of the year.
We're focused on the long runway ahead of us and we are investing in the future.
Our investments in infrastructure will allow us to capitalize on our strategic initiatives and drive sustained profitable growth well into the future while delivering meaningful shareholder value.
With that I'll now turn the call back to Jennifer.
Thanks Todd.
We're extremely pleased with the strength of our business in Q2 and excited for the future. Our strong sales momentum has carried into Q3 and we continue to lay the foundation for long term profitable growth. We are encouraged to see that client demand is showing no signs of letting up across.
All geographies and all channels, we are executing well across our growth pillars, and expanding our geographic footprint, which is enabling us to propel our brand and acquire clients for both our retail and our e-commerce businesses.
In the second half of the year, we're opening in a new market San Antonio, Texas, We're also making progress on our boutique expansion strategy, including the newly expanded Polo Park location in Winnipeg, which.
Opened September 3rd and had the highest volume opening day in all of our reps is history on October six we opened our newly expanded Mark fill Ontario boutique and next month, we will open our brand New flagship York Dale location in Toronto, which we're expanding to 19000 square feet.
<unk> from 10000 square feet. This new corner location will feature an elevated environment, including a dedicated super world experience and in a OK cafe.
In addition to growing our boutique portfolio, we're investing in infrastructure, adding to our team of world class talent and expanding our D. C. I'm pleased with the progress we've made on our new Toronto area D. C, which was slightly delayed is on track for completion in August of 2023.
Okay.
Coming through and out of the Covid pandemic, we have been focused almost exclusively on driving revenue brand infrastructure, our people and our community.
We have also been doing some catch up on things like travel and corporate events that we bypass during the pandemic, while we continue monitoring the challenges at the macro environment very closely we are optimistic about our outlook for the remainder of fiscal 2023, and our sites remain set on the future.
Sure.
As always maximizing our position to deliver everyday luxury for our clients today and tomorrow is our top priority our disciplined long term business.
Consolidated Auryxia too.
Okay.
And it is why we are continuing to invest in our future. We see extraordinary growth opportunities ahead, and we look forward to sharing our multiyear strategic and financial plan at a Ritziest first investor day on October 27th.
Last but not least I would like to thank our team for their tireless hard work and dedication that allowed us to deliver another exceptional quarter and of course and thank you to our clients for their enduring loyalty as we continue to grow everyday luxury.
And with that Ral could we please open up the line for questions. Thank you. We will now begin the question and answer session to join the question queue. You May Press Star then one on your telephone keypad, you will hear a tone acknowledging your request if youre using a speakerphone. Please pick up your handset before pressing any keys to withdraw.
Your question. Please press Star then two we will pause for a moment as callers join the queue.
Our first question comes from Alex <unk> of Bank of America. Please go ahead.
Hi, This is Alex <unk> from Bank of America. Thanks for taking a question on your continued U S expansion. How are you considering your boutique opening cadence is the plan to continue at an eight to 10 stores per year pace or maybe a 9% growth in square footage per year basis or is it going to vary more by year.
Depending on real estate availability.
Hi, Alex its Jennifer we.
I think we've we were announcing eight to 10 stores per year new stores.
Thing that's changed about our new store format is when previously I think we said that they were on average about 6000 square feet. There are now over 8000 square feet and as you know we are opening in a couple of really Super Mega flagship stores, one on the corner of on in New York in Manhattan.
And one on mesh on Michigan Avenue. So we're super pleased about the big flagship formats and on average it will be about 8300 square feet and.
Eight to 10 stores a year.
Thank you so much.
Yes.
Our next question comes from Martin Landry of Stifel. GMP. Please go ahead.
Hi, good afternoon, and congrats on your results.
My first question I was wondering if you can talk a little bit about the consumer.
There's a there's an economic slowdown I'm going on right now in Canada, and the U S. But it looks like it's not having any impact on your sales and I was wondering if you can talk about what youre seeing if youre seeing any changes in the patterns of consumption for your consumers.
Hi, Martin it's nice to meet you.
As we reported what's driving our business right now are new clients and essentially it's it's new clients that love everyday luxury. So we are not seeing anything changing right now in terms of.
Average order values basket size conversion rates all of our business right now is being by traffic and the high demand that we mentioned in our in our prepared remarks.
So you know unlike maybe other businesses that are seeing signals.
In their transactions, we are not but that said we are closely monitoring it but we believe that based on the sales momentum that we're experiencing that we actually have a very strong robust future ahead of us.
Okay.
And I'd like to touch on your inventory levels, you know they've increased.
Significantly do I understand correctly that you.
You know you mentioned that 83% of the increase was related to him just a of recouping of.
Previously to low levels.
So according to my math.
Can we assume that the rest is just pull forward of spring collections and winter collections.
Yes, we pretty much brought the majority of our fall winter upfront in the season as well as as I mentioned select select items in select pieces from spring, we pulled that up as well.
A lot of that was to mitigate yeah. What we were foreseeing the continued supply chain disruption.
That are still happening.
And I'm, making sure we were well positioned to capitalize on the demand that we're seeing and clearly as you can see it's totally field ourself.
Mhm Mhm, Okay and my last question is for Todd Todd.
I was wondering I didn't hear in your prepared remark I'm you know I'm.
The cadence of the gross margin fluctuation or are you still expecting gross margin.
In Q4 due to increase on a year over year basis.
The cadence we're expecting is that in Q3, we will have pressures similar to what we saw in the second quarter.
With similar headwinds.
And then in the fourth quarter as we as we lapped significant spend on expedited freight.
We will see moderating.
Gross profit margin.
Approaching where we were in the prior year.
Yes.
Okay stable year over year for Q4.
Exactly.
Thank you.
Okay.
Our next question comes from Mark Petrie of CIBC. Please go ahead.
Okay.
Yes, thanks, good afternoon.
I guess lots of moving parts in cost of goods, obviously, but it would be helpful to hear a little more commentary just about the different puts and takes and maybe first if you could elaborate on your comments about markdown levels. Both what you experienced in Q2 and what's embedded in your outlook I think previously there.
There was some commentary about potentially not returning to pre pandemic levels and I know some programs weren't run over the last couple of years, but your comments today imply that sort of is in place. So maybe you could just elaborate a little bit there. Please.
No.
Absolutely happy to respond to that Mark in the second quarter, we saw a more normalized markdown level. It was not back to pre pandemic levels.
And obviously, we were extremely low on inventory in the prior year and and therefore had lower markdowns just because of the volume of product.
And then in the fourth quarter. This year, obviously, we're going to be in a much better inventory position and last year had extremely low levels of inventory again.
Meaning that our markdown levels were low abnormally low last year from that and.
We expect that we will return to a more normalized markdown level in Q4 this year, but.
And to point out like we've been talking about.
Are those the sales that we've typically had mid season for example, the layered on sale, which we would have had this last this past weekend in any typical year pre pandemic, we did not have that sale this year.
And if anything we continue to reduce the number of days.
They were on sale and reduce our markdown levels and that trend is not going to stop.
Yes.
Okay perfect. That's helpful. Thank you and I guess one other question just with regards to the outlook and sort of the pacing of sales.
In Q3, and Q4 I mean, if you go back to sort of pre pandemic Q4 was actually larger than Q3 and I realized.
There's been some shifts.
Presumably more U S business mean Q3 is bigger and also I know sales have been getting pull forward just in general.
But are there any other sort of assumptions embedded into that outlook either with regard to your positioning.
Or how you're sort of expecting consumer behavior to play out or evolve.
No Mark we're obviously extremely pleased with the strength that we continue to see in our business up to today.
But there are a lot of macro headwinds out in the environment and.
We still have seven weeks ago in this quarter, which as you pointed out includes black Friday.
And then.
The fourth quarter.
Is a long way from now so.
Again, while we're not seeing any impacts on our clients today.
We think it's prudent to be cautiously optimistic about the balance of the year.
And the good the good news is or the great news is that we have the right inventory to support outpaced growth beyond our our outlook, but we think it's prudent to have it set where it is.
Yeah fair enough, Okay, I'll get back in the queue. Thank you.
Our next question comes from Stephen Macleod of BMO capital markets. Please go ahead.
Thank you good evening.
Just a couple of questions I just wanted to follow up on inventory quickly understanding that you know you have a good handle on sort of the inventory position relative to yourselves expectations are.
But just in the scenario, where you did get through Q4, and Q3 Q4 potentially demand.
Was negatively impacted sell through all of that inventory do.
Do you have a mechanism whereby you can just store that.
You know if you have a certain percentage of proven sellers in this until the next season.
Hi, Steven Yes, as you know we're building distribution centers to accommodate for our growing business and either items as we set our client favorite theyre not necessarily.
I think we were throwing around the word season with quite honestly, we didn't use that word today, but they are season, unless a client favorite we have the space.
Uh huh.
As I've mentioned, our head of supply chain logistics Mike.
You now Chastise me for saying this but I know that as we've increased these inventories over the quarter. He has had no problem dealing with them.
Okay. That's that's great.
And then maybe just with respect to inflationary pressures in some of the challenges that.
Continued you continue you expect to see into Q3.
At the time of the last quarter, you sort of expected that you might have some better visibility.
In a few months' time, so I'm just curious on what your visibility looks like.
You know as you roll into next year with respect to some of the supply chain and an.
And inflation issues like that.
That had been present.
Yeah.
Thanks Steven.
The inflationary pressures that we're seeing predominantly lie in freight cost and labor cost, which I think we've talked about before.
And as Jennifer mentioned during her prepared remarks, we are seeing the freight costs and the timelines decline they have not returned to pre pandemic levels yet.
But we do plan that we will be using more airfreight or more sea freight and less airfreight. It frankly.
This point forward, so including in Q3 and Q4.
But it's still.
To what level that will be for next year I think is still to be determined I don't anticipate it all fully return to.
100% to a normalized level from an expedited freight perspective, and then the labor cost inflation.
That will likely stick, obviously into next year and will be a new new baseline.
And I think it's also important to note, while maybe not inflationary.
The change in the U S dollar.
Obviously has an impact on our business.
It doesn't in the short term.
From a cogs perspective, because we have a.
Obviously <unk> already purchased a majority of our inventory for the season, though.
The prior FX rates. However, looking forward, we will we will benefit on the topline and there will be some pressure.
Potentially on Cogs next year, if the USD doesn't normalize.
Back to where it was say two to three months ago.
Okay. Yeah. Thank you that's that's good color I appreciate it.
And then maybe just finally I know you've talked a lot about just the favorable mix shift that provides a margin tailwind.
I'm just curious are you in a position to potentially talk about what the potential margins could look like or maybe is that something we can anticipate from the investor day coming up in two weeks, yes, 100% will be providing long term EBITDA margin targets on October 27th.
Great. Okay. Thanks, Shannon for thanks, Todd.
Yeah.
Okay.
Our next question comes from Irene <unk> of RBC capital markets. Please go ahead.
Thanks, and good afternoon.
Obviously, you know Jay.
Numbers today really intrigued by some of your commentary around.
The growth being driven by new customers can you talk about sort of the geographic footprint of some of the new customers the way that.
Whatever impact it may be having on e-commerce.
Sure.
You can be sure of the spend for new customers versus existing and the trends in both.
Yeah.
Hiring yes, we can give you a little bit of color I can tell you that our customers are growing in both channels retail and E Commerce and.
And they're growing actually in both countries, Canada and the U S. Obviously the growth is higher in the U S. As we've reported just through ourselves, but what is really encouraging to see is that we continue to acquire new customers in all geographies.
AGA fees and across all channels. We're also seeing consistency on historical consistency in terms of their average spend mm.
And.
<unk> spend average basket size. These types of things so when I say that our growth is driven by traffic and driven by increased customers. It truly is pretty much all of that almost entirely that.
Now that's great. Thanks, Jennifer and if you think about some of the category or the lining category extensions line extensions, what kind of reaction and purchasing patterns are you seeing from your existing and new customers.
Again, you know what there's one thing about us its consistency and balance I think those are the themes that we've talked about before and that continues to.
Show up in our business, even today with all of these new customers, we're seeing a balance of what theyre buying across all departments.
Certainly you know as you could get into winter the outerwear category becomes more prominent.
We are really really excited about the Super bus.
Brand.
You know right now while the weathers in transition in many parts of the cut at least see out here West is still kind of warm sweaters are sweaters are selling we have jackets, we have coke we have.
You know the Puffers, the parkas and the wool coats, but we're also seeing healthy.
Healthy business in bottoms and pants and so really the theme is the same irene across all departments are we're seeing nice demand across pretty much everything all brands are I guess I would say that.
Yeah, It is consistent and and balanced.
That's what we like to hear thank you so much Jennifer.
Welcome.
Our next question comes from Megan Annette of TD Securities. Please go ahead.
Thank you good afternoon.
Just have a couple of follow up questions around the guidance. So first going back to markdowns ahead of the holiday selling periods are you able to quantify what you're expecting there relative to last year and you know what's factored into the annual guidance on that front. So are you are you effectively changing your expectation there for Q4.
Specifically or is that stable to the prior outlook.
No.
Stable to the prior outlook, we are remaining consistent with our.
With our guide of 100 down 100 to 150 basis points for the year for gross profit.
The normalized markdowns that were expecting in the fourth quarter.
Will be offset.
Primarily by.
The lower use of expedited freight in the quarter.
Yes.
Okay, great. Thank you just answered the second part to my question that's all for me.
Our next question comes from Derek delay of Canaccord Genuity. Please go ahead.
Hi.
Okay filling in for Derik most of my questions have been answered as well just a quick clarification for the expedited freight.
Would it be safe to assume that this quarter, what the peak regarding the cost for that.
Of.
The peak quarter was probably Q4 of last year.
And then and then Q1.
Would have been second.
Okay got it thanks.
Our next question comes from Dylan Carden of William Blair. Please go ahead.
Thank you Yeah I was just curious you know the <unk>.
Opening is that you had in the U S in Orlando, and Atlanta, and new markets.
And the ones you've had in northern California, if theres any distinction to be made kind of how those stores open you've talked over the past couple of years about kind of seen two extra volume in some of these newer stores as your awareness grows in the United States are those levels.
At levels relatively consistent does it matter, if that's a new versus sort of an existing market any color. There would be helpful. And then I hope.
Okay.
So we're going to let Brian answer a question. He has been sitting here and I normally go anymore.
So we're gonna have him answer their real estate Western I think they are all feeling sorry for me.
Yeah.
We're so pleased if we roll back the clock five years ago.
We are avoiding.
The southeast.
Because we just didn't know if we had a customer down there.
The weather its not we learned it realize that it's not just.
Cold and colder from the West Coast, the East Coast and that California was sort of a warmer climate.
The southeast is hot and it's not like Southern California, and so both in Texas and in the southeast.
We have two of our better stores in each one of those regions now. So we're just thrilled and so we are where we have Atlanta.
Atlanta is open now.
Insurers opened Orlando and Miami Marlin Millennials opened in Orlando Atlanta has had a little bit of a tougher shape I think it's probably hurricane related.
And then our Nashville store continues to impress and surprise on a regular basis. So we are shocked and everyone. In the performance every one of these stores and so we are doubling down in the southeast for sure really excited about our business there and as we've always said along with our stores and the success of our stores and our E. Commerce is booming because of the omni and the who.
So.
We're thrilled with the southeast which has gone from really.
Very small small market for us.
Yes, 12 to 18 months ago to a meaningful market for us and we will continue to drive a lot of our business. So we're super excited about there are southern California stores continue to perform and what's really been impressive as our Texas stores and so we're looking at real estate and trying to do deals there too so.
We seem to have cracked the code in the southern United States in the current.
Climates warmer climates.
Just thrilled with the business.
Is that I guess, a follow up just to that one specifically is that in part why you're kind of incrementally speaking to more stores in the United States that you unlock the sort of geography that you thought maybe it wasn't previously available to them correctly cable to cold until later this month or next month, if you prefer.
I mean, we can we can discuss that.
At the Investor day.
We're just we're just being surprised because of that it's opening up sort of accelerated some of those sort of second phase and third phase stores in those regions that were now looking at.
Opening in the process of doing deals and some of these places that we didn't think we'd be doing deals with sort of until two three years now.
Okay Super Thanks, I'm going to say my own until October as well then.
Thanks, guys nice work.
Okay.
Our.
Next question is a follow up from Mark Petrie of CIBC. Please go ahead.
Okay. Thanks.
I guess first one.
Just store traffic returns I imagine, you're probably getting a better sense of the return on some of the investments that you've made regarding sort of elevating the store experience and just hoping you could talk about some of those I guess, specifically the selling tools.
And then the enhanced omnichannel capabilities that are that you guys have rolled out over the last couple of years.
Yes, well given just the actual traffic we are getting the foot traffic that we are getting.
With real live customers coming in are physically what we've done is as we've decided that the clientele app that we started like we really rolled it out.
Of any significance during COVID-19 when the stores were closed and it allowed us to digitally cell using the app allowed our style advisers to sell using the app. What we have found which obviously we didnt anticipate was this tremendous demand that we are seeing in this momentum that we're seeing particularly in the U S where.
We could sell to them on the up or we could just sell to them live real live in person and have them really experience the everyday luxury.
Personalized touch high touch service that our style advisers have become to be known for so while we still use the app. It's used mainly to support these in person.
Well because it allows us to look up inventory that might not be in that store at that time and allows us to look up information on the customer but in terms of an hour a selling tool. We are I mean, the big momentum.
The momentum we're experiencing right now we just want to focus on delivering the everyday luxury.
The value proposition that you can experience in store and we actually think that that is where we should probably be prioritizing as far as omni on me I will say that we are going to push that out until next year.
There is a project that is in play right now that must be done at sort of a critical dependency. It's the upgrade to our point of sale so to make sure that we can leverage.
The point of sale basically what it is it's the order broke it's the owner broker that I've spoken about before we need to put in the point of sale upgrade make sure. We're using all of the latest technology. That's integrated to our back end with that and then we will turn on omni and we think just given the business where are you now.
We're managing right now than going into Noelle, it's prudent for us to.
To turn on the on the full omni capability in the new year.
Okay. That's helpful. Thank you very much and all the best.
Thank you.
This concludes the question and answer session I will now turn the call back to Beth Reed for closing remarks.
Thanks, again to everyone for joining us today, we are available to answer your questions and we look forward to sharing more with you on October 27th and have a great afternoon.
Thank you. Thank you.
This concludes today's conference call you may disconnect. Your lines. Thank you for participating and have a pleasant day.
Okay.
Okay.
Yes.