Q3 2022 Steven Madden Ltd Earnings Call
Okay.
Good day and thank you for standing by welcome to the Q3 2022, Steve Madden L. P earnings Conference call. At this time, all participants are in a listen only mode.
After the speaker's presentation, there will be a question and answer session.
I ask a question during the session you will need to press star one one on your telephone you will then hear an automated message advising you had as waste. Please be advised that today's conference is being recorded.
I'd now like to hand, the conference over to your Speaker today Danielle Mccoy. Please go ahead.
Thanks, Tyler and good morning, everyone. Thank you for joining our third quarter 2022 earnings call and webcast.
Before we begin I'd like to remind you that our remarks that follow including answers to your questions.
Statements that we believe to be forward looking statements within the meaning of the private Securities Litigation reform.
These forward looking statements are subject to risks that could cause actual results to materially differ from those expressed or implied by such forward looking statements.
These risks include among others matters that we have described in our press release issued earlier today in filings, we make with the FTC.
We disclaim any obligation to update these forward looking statements, which may not be updated until our next quarterly earnings conference call if at all.
Actual results discussed on today's call are on an adjusted basis unless otherwise noted.
Reconciliation to the most directly comparable GAAP financial measure and other.
Their associated disclosures are contained in our earnings release.
Joining me today on the call is Ed Rosenfeld, Chairman and Chief Executive Officer.
Chief Financial officer, with that I'll turn the call over to Ed.
Thanks Danielle.
Everyone and thank you for joining us to review, Steve Madden third quarter 2022 results.
We delivered solid results in the third quarter, despite the challenging environment with revenue, increasing 5% and earnings in line with expectations.
While macro pressures increased during the quarter consumer demand for our brands and our products remains healthy and our team remains steadfast in its focus on executing our strategy for long term value creation.
First and foremost our top priority as always is creating trend right product assortments and getting them to market ahead of the competition.
Historically, our consistent success in this regard has been driven by our proven formula which combines our talented design team led by Steve with our test and react strategy and industry, leading speed to market capabilities.
Over the last year and a half our product teams have done an outstanding job of developing on trend merchandise assortments that are resonating with consumers, but it had to do this while working much further in advance of supply chain disruption as extended lead times and limited our ability to test and react in season.
Now we are seeing significant improvement in transit times positioning us to get back to what we do best in 2023.
This restores a critical competitive advantage for us, particularly in an uncertain environment, where our wholesale customers will be looking to place fewer orders upfront and chase more in season.
We also continue to support our brands and products with increased investment in marketing and consumer engagement.
An important part of our strategy is connecting our brands to culture through associations with celebrities and influencers that are relevant to our core consumers.
Last month for example, we launched a global brand campaign called Madden Wood, which featured pella porch, a singer and social media creators with over 92 million followers on Tic Tac.
Lotto, a wrapper and winner of the best New artist Award at the 2022, <unk> Awards and <unk>.
<unk> Cherry and actors from the cast of hit television show Euphoria.
By combining outstanding product with effective marketing, we are creating deeper connections with our consumers, which in turn is enabling our success with our four key business drivers.
First of which is driving our direct to consumer business led by digital.
While DTC revenue in the third quarter declined modestly compared to the prior year, if we compare to the third quarter of 2019, DTC revenue increased 56%, including a 178% growth in e-commerce, demonstrating the exceptional progress we've made in this business since the pre COVID-19 period.
Our second key business driver is expanding our business outside of footwear, where we are focused on our largest non footwear category of handbags as well as our emerging apparel business.
And handbags, Steve Madden business, which has more than doubled over the last five years continued its strong momentum in the third quarter with a 19% revenue gain compared to the prior year.
And apparel revenue grew 52% as we successfully transitioned from the BB Dakota, Steve Madden co branded label to the Steve Madden brand for the fall season.
Our third key driver is expanding our international business International has been the fastest growing part of our business over the last few years and we believe it represents our largest long term growth opportunity going forward.
Our outstanding momentum in the international markets continued in the third quarter as international revenue grew more than 50% from the prior year period for the fourth consecutive quarter.
Finally, our fourth key driver a strengthening of the U S wholesale footwear business that remains the core of our business.
In the third quarter U S wholesale footwear revenue increased 3% over last year.
Revenue in our branded business grew more than 20% led by strong gains in Steve Madden in Dolce Vita.
This was partially offset by a significant decline in private label.
Looking ahead, we remain confident in our market, leading positioning and long term prospects in this channel, but in the near term many of our wholesale customers have pulled back on orders as they prioritize inventory control and we have adjusted our overall fiscal 2022 outlook Accordingly, which dean will go into further detail in a little bit.
As we execute all of these initiatives, we also embrace the opportunity and the responsibility we have to create positive change for our people planet and communities and as such seek to embed corporate social responsibility and sustainability in everything we do.
In the third quarter, we published our 2021 sustainability report, which outlines our let's get real sustainability strategy and our company's approach to critical issues, including climate change diversity and inclusion and post consumer waste management.
You can find the report on the sustainability section of <unk> Dot com.
Courage, you ought to check it out.
Overall, we are confident in our strategy and pleased with the progress we are making on our key priorities. Despite the increasingly challenging environment.
While we expect the macroeconomic backdrop to remain unpredictable in the coming quarters. We believe we are well positioned due to our strong brands agile business model and proven ability to navigate difficult market conditions.
Looking out further we are confident that our unique competitive advantages will enable us to drive sustainable growth and value creation over the long term.
With that I'll turn it over to Jim to review, our third quarter financial results in more detail and provide our updated outlook for the year.
Okay.
Thanks, Ed and good morning, everyone.
Our consolidated revenue in the third quarter was $556 6 million.
Five 3% increase compared to 2021.
Wholesale revenue was $434 6 million up eight 1% compared to the prior year.
Wholesale footwear revenue was $330 8 million and eight 7% increase from 2021, driven by strong growth in the branded business in both domestic and international markets led by our largest brands, Steve Madden and Dolce Vita.
This was partially offset by a decline in private label as our mass merchant customers have pulled back on orders as they seek to reduce overall inventory levels.
Wholesale accessories and apparel revenue was $103 9 million up six 2% to last year, driven by strong gains in Steve Madden handbags and apparel.
As in wholesale footwear, the branded business saw strong double digit percentage growth in both domestic and international markets, while the private label business declined compared to the prior year.
In our direct to consumer segment revenue was $118 5 million, a three 7% decline compared to 2021, driven by a decline in e-commerce.
Brick and mortar revenue was approximately flat to the prior year.
We ended the quarter with 216 brick and mortar retail stores, including 67 outlets as well as six E Commerce website, and 20 company operated concessions in international markets.
Turning to our license and first class segments.
Our licensing royalty income was $3 5 million in the quarter compared to $2 7 million last year.
We are winding down our first cost business as we transitioned to private label customer from a buy an agent model to a wholesale model and as such third quarter first class revenue was de minimis compared to $1 million a year ago.
Consolidated gross margin was 41, 2% in the quarter compared to 41, 6% in the prior year.
Wholesale gross margin was 35, 3%.
170 basis point increase compared to last year driven.
Driven by a mix shift to our higher margin branded business.
Direct to consumer gross margin was 61, 2% versus 65, 9% in the prior year driven by an increase in promotional activity compared to last year's exceptionally low levels of promotion.
Okay.
Operating expenses in the quarter were $150 5 million or 27% of revenue compared to $131 6 million or 24, 9% of revenue last year.
The increase was driven primarily by higher warehouse and payroll expenses.
Operating income for the quarter totaled $79 million or 14, 2% of revenue.
Third to $88 4 million or 16, 7% of revenue in 2021.
Our effective tax rate for the quarter was 22, 9% compared to 24, 4% in 2021.
Finally, net income attributable to Steve Madden Ltd for the quarter was $61 5 million or <unk> 79 per diluted share compared to $66 6 million or <unk> 82 per diluted share in 2021.
Moving to the balance sheet, our financial Foundation remains very strong as of September <unk> 2022, we had $148 2 million of cash cash equivalents and short term investments and no debt.
With supply chain disruption easing and transit times decline, we were able to achieve a meaningful reduction in inventory compared to the end of the previous quarter.
Q3 inventory totaled $244 3 million or <unk> $62 2 million.
Or 23% decrease from the end of Q2.
Compared to the third quarter of 2021 inventory.
Inventory was up 21, 4%.
We expect to continue to see improvement going forward and plan to end the year with inventory below the prior year level.
Our capex in the quarter was $4 9 million.
During the quarter, we repurchased $35 $1 million of the company's common stock, which includes shares acquired through the net settlement of employee stock Awards.
Bringing the year to date total repurchases to $112 1 million.
There is approximately $117 million remaining on our current share repurchase authorization.
The company's board of directors approved a quarterly cash dividend of <unk> per share the dividend will be payable on December three 2022 to stockholders of record as of the close of business on December 16 2022.
Turning to our outlook.
And our full year guidance, primarily to reflect a more conservative ordering from wholesale customers for the fourth quarter as they prioritize inventory control.
We now expect 2022 revenue increased 12, 5% to 13, 5% compared to 2021 and diluted EPS to be in the range of $2 77.
$2 82.
Now I would like to turn the call over to the operator for questions.
As a reminder to ask a call. Thank you.
Crestar one one on your telephone.
Please standby will compile the Q&A roster.
Our first question comes from the line of RB P&L with Bnb Paribas. Your line is now open.
Hey, good morning, everyone. Thanks for taking the question.
Morning.
I wanted to start off on the on the DTC side.
Last quarter, you had indicated that.
I think in June and July , but the DCP side, it was comparing up about 57% versus 2019.
Which is kind of where it shook out for the for the <unk> kind of in line with where it was 90 days ago. What you are seeing but could you just give us maybe any color on how you saw.
Demand progressing through the quarter and then what Youre seeing.
So far.
October into early November .
Sure, Yes August actually softened. So August was the weakest month of Q3, and then we bounced back in September and October .
We've done better than August .
Still we're still really roughly.
In line with where we've been over the last several months.
Okay.
Got it and then and then maybe just switching over just a follow up switching over on the wholesale side.
You called out.
Sure.
I think some some softness there.
On the on the mat side or private label side can you maybe talk about <unk>.
Wholesale what youre seeing.
Across the rest of your different customers up there any any.
Variance between them, that's worth calling out or is it kind of more across the board the incremental softness you're seeing.
Yes, it's really across the board I would say.
With very few exceptions, most of our wholesale customers have.
We are prioritizing inventory control most of them have pulled back on orders as they as they seek to to make sure their inventories are in line.
We're seeing that really across different channels of distribution as you point out.
The mass.
Channel is the weakest if you look at year over year sales growth in the back half.
The mass channel is the weakest, but overall we've seen.
An increase in conservatism really across the board.
Okay got it and then if I could just ask one last one just maybe kind of.
Bigger picture kind of question.
How do you think maybe the business could benefit from potential trade down effect. If we if we do go into a more.
Severe economic downturn looking into next year, maybe I.
I think Steve Madden was pretty resilient.
In line, but obviously.
The business has changed quite a lot of things.
So how should we think about the potential for for some trade down benefit.
Yes, I think.
If that comes to pass we are we are pretty well positioned.
And even in the core brands Steve Madden.
We potentially could get some trade down we really offer designers styling at accessible prices.
And as.
As you pointed out the Steve Madden brand.
And our company overall, but it but the brand in particular performed very well during the great recession.
<unk> demonstrated.
Very strong growth even in 2009, so we certainly have a history of being able to navigate these difficult conditions and take share.
Thanks, so much.
Thank you.
Your next question comes from the line of Paul <unk> with Citi. Your line is open.
Hey, Thanks, guys you mentioned the pullback on the wholesale order book I'm curious if you can give any color as to what is happening at point of sale within your your mass the mass channel as well as the Department store channel.
So if you could give any color in terms of what youre seeing in terms of spring orders have you seen a similar pullback.
And if so how does that breakdown by the two different primary channels. Thanks.
Yes, I would say across the board if you look at point of sale our sell through to the end consumer what you see is that our.
Our retail sales are well above where they were in pre COVID-19 or well above 19, but but below what we saw in last year's fall season, when they were pretty exceptional.
In terms of spring order books.
Not going to get too specific here because as in keeping with our normal practice, we're going to talk about 'twenty three on the next call and provide.
Our guidance at that point, but generally speaking.
I don't think it will surprise you that.
The wholesale customers are approaching initial orders.
Conservatively and we're seeing that across the different channels in which we operate.
The good news is that.
Net.
Given the easing of the supply chain and the fact that as I alluded to it.
Paired remarks that we're really now.
In a position to get back to what we do best which is which is working close to season and testing to react.
Testing and reacting in season.
Where we start with initial orders can vary pretty dramatically from where we end in the season.
Many times, we've started off with conservative orders in and identified strong sellers and chased into a very strong season. So it will be in a position to do that in spring 'twenty three.
Got it thanks, and just a follow up what are what are you seeing on the cost side as you look at the 23, maybe first half versus second half how are you thinking about costs.
Well I think on the <unk>.
On the factory side.
There may be some opportunity for.
So our improvement.
You say that the demand environment has weakened some of the factories are a little hungrier for business.
So the supply and demand is.
Moving in our favor there, which enables us to negotiate some better prices and we've also got a currency benefit, particularly against the Chinese RMB.
Which we will be looking to try to take advantage of in terms of our factory pricing.
And of course.
As everybody is aware.
<unk> container rates have come down dramatically, so freight which has obviously been a source of pressure over the last couple of years, hopefully turns or it should turn into a tailwind next year. So we've got.
Some opportunities there.
There are places, where we continue to see to see pressure wages warehousing et cetera.
But certainly.
From an overall cost perspective, I think 2023.
Should be shaping up better than 2022.
Great. Thanks, guys. Good luck.
Yes.
Yes.
Your next question comes from the line of Marni Shapiro with the retail tracker. Your line is now open hey.
Hey, good morning, everybody.
Before I dive into questions I, just wanted to say congrats to team because your product assortments have been spot on.
Its stunning new stores continue to just be busy and filled with all the right trends.
So I wanted to just ask a couple of quick ones September and October I think you said sales rebounded a bit from August .
To ask this question.
<unk> coover probe, whether so many other issues, but with some of that influenced by weather when it kicked in a little cooler did you start to look for boots, and low fares versus open toe shoes, and could you give us a little bit of high level, our sneakers is still doing well.
I know theres, just a lot of fashion happening out there I'm curious because that was a very strong basis has been a very strong basis for you.
Yeah look on the weather yes.
<unk> helps.
When it gets colder.
Flip us to more fall products.
I haven't it's not that we've been talking about a lot internally I don't think it was a huge driver, but certainly it helped.
In terms of sneakers, we've still got some very some very good sellers in that in that category.
But I would say theres, a little bit less.
Newness there right now.
So we're still selling some very well we've got some Oliver white sneakers doing very well some big bottom sneakers continue to perform.
But I don't see that category on the upswing.
At the moment.
And then could you just also.
You talked a little bit about your mass retailers being pulling back.
Orders can you talk a little bit about what that looks like from.
The off price channel and how it looks are they canceling orders already into spring and summer of 'twenty three or was this just near term just a little bit more clarity on that comment.
Well I think.
In terms of cancellations, yes, we haven't we have dealt with some cancellations for fall here.
No. We're not we're not really seeing cancellations for spring, but we've but we've seen conservative initial ordering.
Yeah.
Okay. That's great and then sorry, one last any up I'm just curious any update on the men's side of the business I know it's smaller.
Then the womens womens has been killing it but just any update on the men's side.
Yes men's has been a really nice story for us over the last the last year or so it was a business that took a big hit during COVID-19, but it has bounced back very strong in.
Really we've been really pleased with the progress we've made there we really elevated the product. We've we've increased AUR is but we've done it by really putting more into the shoes improving the quality.
Improving the styling and that business is.
It's performing very well for us both in terms of shipping, but also but also sell through and in better tiers of distribution too so performing very well at the Nordstrom Dillard's et cetera.
So just excited about what we're seeing there we're having we're having a good boot season. This fall our dress shoes are performing very well doing well with some real dressy staff special occasion type step so.
A lot of good stuff there.
Excellent congrats.
On that and best of luck for the holiday season.
Yes.
Your next question comes from the line of.
Tom Nick <unk> with Wedbush Securities. Your line is now open.
Hey, guys. Thanks for taking my question.
You mentioned in the press release in the prepared remarks that you saw some.
Increased promotional activity.
In Q3.
I know you kind of had exceptionally low levels of promotional activity in 2021.
Would you say that.
The promotional activity in Q3 was more just kind of like getting back to normal.
I don't know if you can compare it relative to where you were in 2019 was it kind of like.
Better or worse than what you were seeing promotional Lee in DTC.
And kind of pre Covid World and then.
Should we think about promo activity.
And in DTC in the.
In the fourth quarter and maybe into early 2023.
Yes, I think promo activity.
Generally speaking, it's sort of back to 2019 levels in the in the industry overall.
I think in our own DTC right now we're still trending.
Less promotional than we were.
Back in 19 in Q3, we did have to get a little bit more aggressive to move through some of the seasonal spring summer goods that we were clearing but as we move into Q4.
That's part of it is behind US and in fact, we think that we can.
Overall basis have DTC margin versus last year in Q4 or in line or up to last year.
Alright sounds good thanks for taking my question and best of luck in the holiday season.
Thanks, Tom.
Your next question comes from the line of Laura Pine with loop capital. Your line is now open.
Thanks for taking my question.
The mix comment that you make on the wholesale business in the press release that mix has improved.
Is are you seeing the and I think that that was mostly just because private label has declined but are you seeing any shift in mix within your branded goods either for the better for the worse.
No you are right the comment was related to branded versus private label and the fact that branded is outperforming private label in the back half here. It wasn't it wasn't that theres really no meaningful change between brands.
In the fourth quarter, obviously, we can see your revenue guidance, but embedded in that do you think there'll be an improvement in the trend of your E Commerce business in the DTC segment.
Yes year over year I do.
Still planning it.
Down low singles.
In Q4, but that represents.
Modest improvement from where we were in Q3.
Got it thank you.
Thanks, Laura.
Your next question comes from the line of Jay sole with UBS. Your line is now open.
Great. Thank you so much you mentioned.
Increased investment in marketing and consumer engagement.
And are you opening remarks of the call maybe elaborate on that a little bit tell us kind of what your what your plans are what your goals are with that and sort of the cost that is going to be associated with that and sort of the return that youre expecting that investment.
Yes, I mean, that's something that we've been talking about it for a few years now.
And so each year you have been seen us increase the investment in marketing.
Part of that obviously are a significant part has been performance marketing associated with driving the.
E Commerce growth that we've seen which has been tremendous over the last few years.
But in addition to that we're also investing in some brand campaigns like the one I mentioned earlier and top of funnel marketing and that's going to continue to be important as we go forward.
This year it was about 50 basis points.
Increase in <unk>.
Marketing as a percentage of sales I think we're going to end the year around 4% of revenue.
I think youll continue to see a little bit of pressure, there, but probably not to that same degree going forward.
Got it okay. Thank you and then maybe if I can follow up just if you could just.
Maybe give a little bit more detail on exactly what drove the change in the guidance from last quarter to this quarter I mean, it sounds like it was orders in the mass channel, but I mean, just if you can sort of confirm that that would be helpful. Thank you.
Yes. It wasn't just the mass channel it was really the wholesale business overall, so DTC really remained in line with where we were.
With our forecast.
That we provided at the end of Q2, but.
But we did pull back on our estimates for the wholesale channel and again, that's math, but thats, but thats. The other tiers of distribution as well as all of our many of our wholesale customers gotten more conservative and prioritized inventory control.
Got it and maybe just the last thing from me it sounds like you feel pretty comfortable with the inventory that it'll be sort of back in line with the sales trend at the end of the year.
Can you just explain maybe what gives you confidence that the inventory that you're carrying now won't result in bigger promotions are more clearance activity that would put some pressure on gross margin.
Youre talking about the inventory on our balance sheet.
Yes.
Oh, yes, well look I think.
We felt pretty comfortable with that.
The level of inventory that we've had throughout the year and even I think we went into quite a lot of detail at the end of Q2, but the fact that while it was optically high it was really related to.
US, adding 40 days to our production calendar.
Because of the extended transit times. So didn't mean that we had a lot of inventory that wasn't accounted for it just meant that we were placing those orders earlier.
And so you'll continue to see that impact that's obviously gotten a lot better we shaped at least 10 days or so.
Off that four.
With the inventory that we have at the end of Q3 and now.
As we're going forward.
Whereas we were building an additional 40 days of Patty for the transit time now, it's really five to 10 days extra compared to normal.
Compared to where we were pre COVID-19, so youre going to start to see that inventory level come down but.
More specific.
More specifically addressing your question.
Do feel good about about where we are with the inventory levels.
Not a lot of speculative inventory here certainly in the wholesale channel obviously, we've got inventory for DTC.
But we feel good about that.
The amount and the composition of it.
Got it thank you so much.
Okay.
Your next question comes from the line of Dana Telsey with Telsey Advisory Group. Your line is now open.
Hi, good morning, everyone.
Given the adjustment in sales growth for the year 12, five to 13, 5%.
Are your new expectations for wholesale and DTC growth for the year I think it had been like mid to high teens wholesale growth of mid single to high single digit DTC growth.
Reframed and water, yes expectations for international and how did that do this quarter.
Sure.
Yes, so in terms of the channels DTC, we're still looking at six 7% growth.
For the year, which is pretty similar to where we were before.
In wholesale.
I would say more like 15% to 16%.
For the year.
And.
Internet International Yes, So international has been.
Real bright spot for us that's been the best performing part of the business this year.
Which.
What's now been a few years that this has been the fastest growing part of our business but.
As I mentioned on the call or on the.
Earlier part of the call four quarters in a row of more than 50% year over year growth.
So the momentum really continues there and we're just very pleased about what we're seeing and it's really across all of our of our meaningful regions, we're seeing nice growth.
Got it and then on the brick and mortar side of the business, which I think was flat anything to what you.
Were seeing theyre urban versus suburban outlet versus full price and how that's performing.
Yes.
A geography.
New York City urban versus suburban New York City was our top performing.
Region in terms of comp performance now.
A lot of that was that it had the easiest comparisons from a year ago, because that that region came back later.
But very strong comp growth in Q3 in New York and got back to flat to 19, which is the first time, we've seen that since that since COVID-19.
And then.
In Q3, our outlet stores did a little bit better than our full price stores.
Got it and then just lastly on lead times I think you were 30 days pre pandemic I think you have 45 days last quarter.
Where are you now and how do you see that progressing.
Yes, we're really when we're placing orders now we're working on sort of 35 to 40 days as the assumption so.
Continuing to make progress there.
Thank you.
Thanks Dana.
Your next question comes from the line of Sam Poser with Williams trading your line is now open.
Thanks for taking my questions good morning.
Yes, I want to get into the weeds, a little bit here.
Do you think that could you hear me yes.
Yes.
Okay.
You believe that given the conservatism or the caution of your wholesale partners that thinking.
Thinking about it in a large picture last last year. They did great with not a lot of inventory they thought they could do better this year they bought too much now it looks good.
Like an overreaction in the other direction on initial orders sort of going into next year.
And youre thinking of yourself and the <unk>.
<unk>.
Respond to this.
<unk>.
Without commenting on whether they are overreacting or not I'll say that the.
The initial orders are going to be conservative and we do feel that we have a real competitive advantage in that environment. If if those retailers need to chase goods and Thats I think if you look back for instance at the at our success during the great recession.
I think that.
Part of that obviously most of it was because we had great great product, but but a good part of that was also because of our ability to operate in this environment and to be the go to vendor when folks when adjacencies and because similar to what we're seeing now back then many of the retailers decided they wanted to place fewer orders upfront.
And really look to chase in season, and we are the go to supplier.
And anything like that.
So to follow up on that given the supply chain issues that have been improving but were there you've written a lot more.
Let's call. It March April orders now our February March April orders now.
Our in house than they were historically is that a fair statement as a percent Mike you've just taken more orders for that period, given the way the supply chain was working.
At the time.
But we're really getting back to our normal model now so youre seeing were.
We're moving much more back to our normal calendar.
So a year ago.
Year ago in December you were taking.
Back to school orders for all practical purposes, given the supply chain. This time I assume you'll be right.
When we get the Fannie in December Youre going to be.
Writing.
March April and be able to get goods quickly if need be is that fair statement.
Yes, we will be able to work, we'll be able to work closer to season and test and react in season again, that's right.
Okay and then.
It was sort of asked before but the demand there.
And youre seeing for product within your big wholesale partners is stronger than ever.
Is it stronger than the orders.
So that are coming your way.
To replenish those or whatever.
Yes.
Thank you for the concise answer and continued success.
Thanks Sam.
Your last question comes from the line of.
Steve Marotta with C. L. King Your line is now open.
Good morning, Ed and Danielle and you mentioned that costs in 2023 are looking better than 2022 can you talk a little bit about whether thats absolute or relative in other words.
Do you think there will be less inflation next year or do you think that there could actually be deflation in your unit landed unit costs next year versus this year.
I think there.
There is a scenario where there's actually deflation.
And landed costs.
That's helpful and this is Ed.
Tad bit speculative, but considering that you are very near to your normal turnaround times maybe.
Maybe five to 10 days extra currently at this trajectory when do you think you would get back to you fully normal 100% normal.
Within.
The next couple of months, yes, excellent by yearend yeah, Okay. All right excellent. Thank you very much.
Thank you.
There are no further questions at the queue I will now turn the call back over to Ed Rosenfeld.
Great well. Thank you everyone for joining us this morning, and we look forward to speaking to you on the next call have a great day.
This concludes today's conference call. Thank you for your participation you may now disconnect.
Yes.
The conference will begin shortly.
As Johan during Q&A, you can dial star one one.
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