Q3 2023 Delta Apparel Inc Earnings Call
Thank you and good afternoon to everyone participating in Delta apparel, Inc. Fiscal year 2020.
23 third quarter earnings conference call.
Joining us from management.
Humphreys, Chairman and Chief Executive Officer, Justin Grill, Executive Vice President and Chief administrative officer, and Nancy <unk>, Vice President and Chief Accounting Officer before we begin I'd like to remind everyone that during the course of this conference call projections or other forward looking state.
May be made by Delta apparel executives, such projections and statements suggest prediction and involve risks and uncertainties and actual results may differ materially.
Please refer to the periodic reports filed with the Securities and Exchange Commission, including the company's most recent annual report on Form 10-K, and quarterly reports on Form 10-Q.
These documents identify important factors that could cause actual results to differ materially from dose contained in the projections or forward looking statements.
Please note that any forward looking statements are made only as of today and except as required by law. The company does not commit Jetbead August sliced any forward looking statements, even if it becomes alright that any projected results will not be.
We realized.
I'll now turn the call over to Mr. Humphreys. Please go ahead.
Good afternoon, and thank you for joining us today and for your interest in Delta apparel before we begin with a review of our third quarter results I want to once again, thank our teams throughout Mexico, Honduras, El Salvador, and the United States.
<unk> proud of the way they have executed on a host of cost inventory and debt reduction strategies that have been very meaningful to our business and helped us navigate through an extremely challenging operating environment over the last several quarters their unwavering commitment to meeting the needs of our customers day in and day out.
Is amazing.
Looking at our third quarter results as expected parts of our business continued to be impacted by the well publicized right sizing of inventory levels across the retail supply chain and our overall sales were down relative to last year's record buying activity and sellers market across the activewear industry.
Uh huh.
However, we were encouraged to see some preliminary signs that demand in the activewear market has begun to stabilize enabling us to run our manufacturing plants closer to run rate capacities in setting the stage for improved operating performance in the fourth quarter and into fiscal 2024.
<unk>.
I am pleased to report that we continued to see steady progress towards a more normalized cost environment for our business.
And we were able to work through much of the trailing impacts of last year's historically high price cotton flowing through our inventory and cost of sales during the quarter.
Yes.
Our decision towards the end of last year to curtail production levels to match, the lighter industry demand and to purchase less cotton at what were heavily inflated prices proved to be strategically sound and has put us in what we believe is a solid competitive position moving forward. However is hard to overstate the.
<unk> of the high price cotton and the immediate buying activity across the activewear industry has had on our operating results. We believe it is essential to isolate these two unique impacts on our business in order to properly understand our operating results both this quarter and year to date as well as <unk>.
Positioning for sustainable improved performance going forward in.
In addition to the obvious margin pressure from a key raw material input light cotton escalating almost 100% above historical averages reduced production levels in our vertical manufacturing platform carry significant noncash impacts from unabsorbed fixed overhead expenses.
As well as significant cash cost from severance and temporary unemployment benefit payments required in the offshore jurisdictions that we operate.
Without these unique cost drivers our results for the third quarter and for the first nine months of our fiscal year resemble the solid operating performance we achieved in recent years.
For example, our gross margins for the quarter were 13, 1%, but adjusted for the cost impacts of these events our gross margins were approximately 22%. Similarly.
We reported an operating loss of $4 5 million for the quarter, but adjusted for the cost impacts of these events, we achieved operating income of approximately $5 5 million.
The good news is that we see both of these unique trans diminishing, although we do expect some expense impacts from them in our fourth quarter results and in the first quarter of our next fiscal year as these expenses roll through cost of sales.
In addition.
<unk> action to calibrate our production levels and moderate our inventory build we also initiated a variety of strategic actions to better optimize our overall cost structure, including the transition of our more expensive production capacity in Mexico, where we have to purchase third party textile fabric.
Our lower call Central America platform served by our own textile manufacturing operations will absorb this production.
This transaction requires significant reductions in our offshore manufactured workforce and associated separate payments benefits.
We also consolidated the digital print capacity at our legacy facility that we assumed by an acquisition into our national footprint of hybrid print and distribution facilities.
We estimate annual run rate cost savings of up to $6 million from these restructuring activities once fully implemented but they also carried some significant one time costs that impacted our year to date results and we expect some additional one time cost.
Certain initiatives and our fourth quarter.
Nancy will now provide more detail on our reported and adjusted results in a moment, but let me now turn the call over to Justin to walk you through our business highlights in more detail I'll join them at the end of the call and opening up for questions Justin.
Thanks, Bob as Bob mentioned, our teams have admirably executed on a variety of cost inventory and debt reduction strategies intended to counteract the challenging operating environment, we've seen in recent periods.
Their hard work is evident in our third quarter results.
We ended the quarter with an approximately 13% reduction in our inventory from only six months ago in December and expect further reductions as we move through the fourth quarter that should position us to enter the new fiscal year with appropriately balanced inventories.
We also ended the quarter with a significant reduction in our long term debt, which was down 15% from our most recent high and expect to reduce debt further in our fourth quarter.
The cost structure optimization initiatives, Bob mentioned, along with our very disciplined spending including less than $2 million in capital expenditures during the quarter drove a 16% year over year decrease in SG&A expenses for the quarter.
Now turning to our individual business units, our salt life business continues to expand its direct to consumer footprint recently opening its first two retail stores in New York, and it's 24% and 25th locations across the country.
We now operate for salt life stores in the northeast market, including a rope at Beach, Delaware store opened last year and our recently opened location in long branch, New Jersey, and see a tremendous runway for growth there.
Salt life branded retail footprint now extends across nine states, including California, Texas, Alabama, Georgia, Florida, South Carolina, Delaware, New Jersey, and now New York.
Same store sales for the quarter among our stores open at least a full year decreased approximately three 5% with the dropped due to lower travel to the heavy tourist destinations, where we target our retail strategy as well as the sub optimal spring and summer weather conditions in these areas.
Our key retail performance metrics, such as conversion rate are generally holding steady and we look for our same store sales to return to growth when customer foot traffic picks up.
Salt life ecommerce sales continued their strong trajectory during the quarter with over 100% sales growth versus the prior year.
In addition, we saw significant double digit growth in key E Commerce performance metrics, such as site traffic conversion rate average order value and units per transaction.
Along with Salt life growing license royalty revenue stream, which includes a new home furnishing partnership that we're extremely excited about the E. Commerce channel remains one of the most profitable distribution channels across our entire business.
The E Commerce channel also continues to give us great visibility into the Salt life brands geographic appeal, which is extremely valuable and planning future retail site locations.
Our new retail locations in the northeast market are an excellent example of our data driven approach to site selection in recent years. The e-commerce purchasing activity in New Jersey, and New York was consistently among the most active on our salt life Dot Com site and we look for these store openings to contribute to our market Halo effect further driving ecommerce traffic among those.
Visiting these high tourist traffic areas.
As we noted on our last call we expected the inventory overhang across the retail landscape and the ongoing U S consumer uncertainty to impact salt life's wholesale channel during the quarter, which they ultimately did.
Like our branded retail footprint many of our wholesale accounts were also impacted by lower domestic travel activity in the late spring and early summer, particularly salt lifes dealer base and heavier tourist destinations.
All of these factors coupled with last year's supply chain delays concentrating more shipments and sales in the third quarter created a challenging third quarter wholesale comp for the salt life business. However for the full year, we anticipate overall sales growth at Salt life and continued sales growth going forward.
As a final note on the Salt life business, we were very pleased to see the brand recently featured in the New York Times. The work. The team has done to grow this powerful lifestyle brand across the United States and internationally and to do so profitably is something we are extremely proud of.
Turning to our <unk> business. The team continued to make significant progress on a variety of production efficiency and quality initiatives during the quarter.
We completed our goal of standardizing the operating software, Inc, and Humidifiers mission systems across our entire fleet of Polaris digital first equipment.
This initiative resulted into necessary downtime and reduced capacity across our locations in our network, where we operate this higher print quality equipment, but the consistency and quality gains coming out of this effort should significantly enhance our operating advantages and our go forward service platform for our digital first customer base.
Our initiative to prove that within spec production rates on our Polaris equipment also progressed well during the quarter and we continue to achieve record on quality rates on the core need equipment, we use outside of our digital first customer base.
The increasing usage of our delta direct blanks by our customer base, which is now on a path for acceleration as we develop more proprietary fabrics and products optimized for digital printing and the consistency advantages they bring compared to third party garments are key drivers of our improvement in this area.
Our recent initiative to concentrate our digital first strategy is primarily on high usage product sizes and colors has been successful in achieving our consumer satisfaction targets to date.
We now serve digital first customers from three of our seven locations across the United States and are working towards re engaging our fourth location in reincorporating additional sizes and colors into our service offering as we move closer to the holiday season.
We also intend to expand the usage rate on our fleece youth and big and tall products within our digital first customer base going forward.
Looking at our digital first strategy from a broader perspective, the BTG to go team's effort over the last two years to incorporate an entire fleet of state of the art printing technology, which we believe to be the largest and most advanced of its kind in the market across multiple locations to serve a make to order customer base with the highest quality requirement.
And the industry.
And to advance all of the operational and technical initiatives inherent in our strategy of that magnitude have been exemplary.
The scaled multi technology solutions DTD to go now offers provided with another unique competitive advantage in the market as well as another driver in attracting more players across the decorated apparel space to digital including more retailers brands and content companies.
CTG to go also reached an exciting milestone during the quarter by going live with our new proprietary online portal designed to facilitate customer orders for quick turnaround lower unit volumes not suited for traditional screen print and decoration platforms.
The new portal allows our wholesale customers to simply log in upload an image file and select desired colors and sizes, which can take only a matter of minutes.
From their DTD to go does all of the work and deliveries within two to three days.
We believe our portal solution is tailor made for the AD specialty and promotional market, which is a huge and somewhat untapped market for <unk> to go as well as small and mid sized customers, who do not have enough volume to devote resources to build a dedicated API with BTG to go is our larger customers do.
The new portal is also ideal for traditional screen printers, who have orders that they either can't fulfill due to time constraints or don't want to fulfill due to lack of profitability on smaller orders.
We anticipate substantial near term demand creation opportunities among these groups and plan to devote marketing resources to this area in the near term.
More broadly we believe the portal it can be another accelerating factor for industry migration to digital print fueling our overall growth and market share gains.
From a macro perspective, we continue to strongly believe that the multibillion dollar decorated apparel market will gravitate to the speed to consumer.
SKU customization inventory efficiency and other benefits of on demand digital <unk>.
BTG to go with its unique advantages, including market, leading print capacity nationwide fulfillment network proprietary technology and processes developed over 15 years in the digital space and vertical blank supply through Delta direct is best positioned to capitalize on this digital disruption trend.
Given these dynamics and DTD goes recent productivity gains and solidifying operating picture, we expect a healthy double digit sales growth trend and improve profitability at BTG to go in fiscal year 2024.
Now turning to our activewear business, which as a reminder is organized around three key go to market channels Delta direct which provides primarily blank garments to the screen print promotional and E retailer markets as well as retail licensing customers that sell into mass retail supply chain global brands, which provides custom decorated retail.
<unk> already activewear to major brands sportswear players in the U S military and retail direct which provides decorated apparel to brick and mortar and online retailers.
This business has experienced the vast majority of the impacts over the last several quarters from the cotton pricing and production curtailment trends Bob referenced earlier.
Primarily because it houses our entire vertical manufacturing platform outside of BTG, because digital print fulfillment network and serves the channel's hit hardest by the over inventory environment.
And mid tier retailers.
However, as Bob indicated we are now in an improving cost environment in our activewear business is vertical manufacturing platform is running at levels much closer to capacity.
We are encouraged to see more signs that demand in the activewear market, including the retail licensing channel maybe stabilizing with our decision last year to minimize our purchases of the high cost cotton and more quickly get to the point, where we are now steadily seen more normalized cotton costs in our inventory.
We believe our activewear business is well positioned to take advantage of market improvements and close out our fourth quarter and move into fiscal year 2024 with steadily improving operating performance.
Let me now pass it over to Nancy for a review of our financial results.
Thank you Justin.
Before we get into our financial results. Please note that we will discuss a variety of financial measures that are adjusted to account for the cost impacts at the production curtailment activities inflationary cotton and strategic initiatives pop reference earlier, including non-GAAP metrics such as adjusted gross.
<unk> adjusted operating income and adjusted net income.
We believe it is important to evaluate our operating results this quarter and year to date in light of the impacts of these unique events.
Listeners may access our reconciliation of those measures to gross margin operating income and net income.
Strictly comparable GAAP measures on the Investor Relations page of our website at Www Dot Delta Apparel, Inc. Dot com.
Alright, the third quarter ended July one 2023 net sales were 100.
$6 3 million.
Compared to the prior year third quarter net sales of $126 9 million.
Salt Life Group segment net sales were $17 2 million.
Compared to the prior year third quarter net sales of $20 9 million.
With the year over year comparison skewed by significant sales occurring in the prior year third quarter due to transportation delays.
Net sales in the Delta group segment were $89 1 million.
<unk> $206 million in the prior year third quarter.
Gross margins were 13, 1% compared to 24, 2% in the prior year period.
Driven primarily by the production curtailment in inflationary cotton costs.
Adjusting for these production curtailment and cotton cost impacts third quarter gross margins were 22, 7%.
Delta Group segment gross margins for the quarter were five 9% compared to 19, 1% in the prior year period.
Adjusted for the production curtailment and cotton cost impacts Delta Group segment gross margins were 17, 4%.
Salt Life Group segment gross margins for the quarter increased 30 basis points to 55% from 52% in the prior year period.
SG&A expenses declined favorably to $18 5 million from $22 4 million in the prior year third quarter, while SG&A as a percentage of sales was down favorably to the prior year period at 17, 4%.
Operating income declined year over year from $9 3 million or seven 3% of sales to an operating loss of $4 5 million or four 2% of sales.
However, adjusting for the production curtailment in cotton cost impacts third quarter operating income was $5 8 million or five 5% of sales.
Delta Group segment operating income for the quarter declined from $10 7 million to.
A loss of $3 6 million. However, adjusted for the production curtailment in cotton cost impacts Delta Group segment operating income was $6 7 million.
Seven 5% of sales.
Salt Life Group segment operating income for the quarter with $1 6 million or nine 6% of sales compared to $3 $5 million and 17, 2% of sales in the prior year.
Net income declined from $6 2 million or <unk> 88 per diluted share to a net loss of $6 3 million or.
Or 90 cents per diluted share however.
However, adjusting for the production curtailment in cotton costs impacts third quarter net income was $1 2 million or <unk> 17 per diluted share.
Net income for the quarter was also significantly impacted by the elevated interest rate environment with our interest expense for the quarter essentially doubling over the prior year quarter.
Net inventory as of June 2023 was $226 2 million a sequential decrease of almost $30 million from December 2022, and generally flat year every year with inventory to enter and $27 6 million at June 2022 are in.
Inventory decrease with a product of our team's excellent execution on our high priority reduction initiative.
Total net debt, including capital lease financing and cash on hand.
<unk> $66 $2 million as of June 2023.
Approximately 15% reduction from $194 3 million at March 2023, and a slight increase from $162 4 million at June 2022.
Cash on hand, and availability under our U S revolving credit facility totaled $14 3 million as of June 2023, a decrease of $12 9 million from December 2022, and $16 $5 million from June 'twenty, two with the decrease from December .
2022, principally driven by investments in the business support working capital needs as well as higher interest expense.
We spent approximately $1 5 million on capital expenditures during the third quarter compared to $5 5 million during the prior year third quarter with expenditures focus on salt life retail store build outs as well as facility and information technology enhancements.
For the nine months ended July one 2023, net sales were $323 9 million compared to the prior year period net sales of $369 million.
Salt Life Group segment net sales were $46 5 million compared to the prior year period net sales of $46 million.
Net sales in the Delta Group segment were 277 $5 million compared to $323 million in the prior year period.
Gross margins were 13, 5% compared to 23, 6% in the prior year period, driven primarily by the production curtailment in cotton cost impacts coupled with the impacts of the strategic actions we enter.
Better optimize our overall cost structure.
Adjusting for the collective cost impacts of the production curtailment cotton and strategic actions gross margins were 22, 7%.
Delta Group segment gross margin 46, 5% compared to 19, 6% in the prior year period. However, adjusted for the collective cost impacts of the production curtailment and strategic actions Delta Group segment gross margins for 17, 2%.
Salt Life Group segment gross margins increased to 55, 4% from 51, 6% in the prior year period.
SG&A expenses declined favorably to $56 7 million from $59 6 million in the prior year period, while SG&A as a percentage of sales increased from 16, 1% to 17, 5%.
Operating income declined year over year from $29 5 million or 8% of sales and operating loss of $12 4 million or three 8% of sales.
However, adjusting for the collective cost impact.
<unk> curtailment button and strategic actions operating income was $20 5 million.
Or six 3% of sales.
Delta Group segment operating income declined from $33 6 million to loss of $11 million. However, adjusted for the collective cost impact of the production curtailment.
Strategic actions.
The group segment operating income was $22 million or seven 9% of sales.
Salt Life Group segment operating income was $6 6 million or 14, 1% of sales compared to $7 million.
For 15, 3% of sales in the prior year period.
Net income declined from $20 million or $2 84 per diluted share.
Off of $16 8 million or $2 41 per share.
However, adjusting for the collective impact of production curtailment cotton and strategic action net income of $7 $2 million or dollar per diluted share for the nine months period.
Net income for the first nine months was also significantly impacted by the elevated interest rate environment with our interest expense for the period essentially doubling over the prior year period.
Now I'll turn the call back over to Bob.
Thanks, Nancy with the two broad based cost trends materially impacting our business over the last several quarters now more in our rearview mirror and our manufacturing platform running closer to capacity. We believe we are well positioned to capitalize on the early signals, we are seeing of improving market.
<unk> the decisive and strategic actions, we have taken to rightsize, our cost structure manage our inventory to the current demand environment and reduce debt should provide significant benefits going forward, we expect to see steady improvements in our operating results as we close out our fourth quarter and move in.
Our next fiscal year.
For fiscal year 2024, we currently anticipate net sales in a range of $410 million to $425 million generating operating profit margins of three five to $4 two 5% with gross margins sequentially increase into the low to mid 20%.
Range and improving operating margin profits beginning in the second quarter as well as revenue growth in the back half of the year.
Delta apparel remains in excellent position to take advantage of favorable changes in demand as they arise across our five go to market channels and we will look to further expand our customer and channel reach as we seize on the many opportunities created by highly diversified operating model our balance sheet instead.
Improving and we remain keenly focused on growth profitability and above all creating value for shareholders for many years to come.
And now operator, you can open up the call for any questions. We may have.
Thank you ladies and gentlemen, we will now begin the question and answer session.
Have a question. Please press the star followed by Don on your telephone Keypad, if you will hear from.
Trump acknowledging a request questions will be taken in the order received should you wish to cancel your request. Please press the star followed later too.
One moment. Please for your first question.
Your first question comes from the line of Dana Telsey from Telsey Advisory Group. Please.
Go ahead.
Hi, good afternoon, everyone and nice to see the progress a couple of questions. As you think about the business excluding the production curtailment in cotton costs.
Does this go on for the next three quarters when do you anniversary Ed How do you think have wanted to steady state.
When you talked about the next question is about when you think about 2020 for Ya just mentioned gross margins in the low to mid twenties and the operating margin, obviously low single digits.
Given that how do you thinking about SG&A or is some is there some variability so that there can be room for more leverage to maybe get that operating margin higher would it be would it be unreasonable to think that if all things went well could it be a mid single digit operating margin.
Thank you.
Okay.
Yes.
So certainly and looking into next year, we're looking at where we have cotton fixed and where we see that marketplace going.
We also look to see what rates, we expect to run our manufacturing facilities, while continuing to reduce inventory.
And obviously, we continue to.
Comb, our company and look for savings in <unk>.
Fisher to see gains in SG&A call. So.
We'll continue to work on that as the year progresses, and certainly don't think mid single digit operating profits as we progress through the year for out of the question.
Yes.
Thank you.
And then when do you anniversary these.
The product cost that we talked about.
And the changes there the production curtailment in the cotton costs, when does that normalize and how you're planning interest expense going forward.
So.
Each really months now, we're getting to lower cost production lower cost raw materials.
It will be into our second quarter before what we would say is more completely normalized.
Raw material costs flowing through our cost of sales we are receiving.
And starting to process, a materially lower price cotton and our manufacturing operations.
So that will that will continue as the year goes on.
Got it and just lastly can you expand on the demand improvement that you're seeing particularly in activewear, which customer bases, how youre thinking about holiday right now and at what capacity are the facilities now running thank you.
So we will be running our facilities.
As we go into our first fiscal quarter and the remainder of our fourth quarter.
Probably about 90% of what we consider normal manufacturing output. So we expect to continue to decrease inventories as we progress through fiscal 2024.
And I would say.
Most of our channels are showing improvement in demand with.
With the exception of our global brands, where that customer base.
Their demand held because we had pre book business and.
They took the the orders that were on the books with us with there.
As you hear all of their calls obviously working on reducing their inventory level. So that business is slower and we expect it to be slower through most of fiscal 'twenty four.
Thank you.
Thank you once again should you have a question. Please press Star then the number one on your telephone keypad.
And your next question comes from the line of Samuel Johnson from Johnson investments. Please go ahead.
Yes. Good afternoon can you first of all give us an update on the <unk> business.
Yes happy to do that so.
As I'm sure you're probably aware during the last quarter, we went through all of our production facilities.
Facilities that house, our new Polaris equipment.
And reset all of that.
Received that equipment, there's 13 <unk>.
Unique pieces of production equipment over a period of.
Probably two five quarters end.
They were not all exactly the same and we needed them to be all exactly the same to meet the production requirements.
We needed to meet and fanatics was asking estimate so that process went well and.
We completed that on time and feel very good about how that equipment is now set up than.
Everyone on the same.
Art system and everyone on the same ink system and everyone on the same version of software Thats running the various pieces of equipment and so our consistency and quality has improved.
Dramatically.
We have also limited what types of.
Products that we will print one as we work on customer satisfaction.
Our customer being fanatics and their end customer as well so that has progressed well and we started that production back up a little ahead of schedule. So.
We never completely shut down manufacturing output at our Phoenix facility.
Next started up our Cranbury, New Jersey facility.
We're now starting up our Dallas.
This facility and.
In the coming months, we will be starting up our Fayetteville, North Carolina facility.
We would expect to go into next.
Holiday season, running all of our equipment at the pace that we.
So choose to do with labor availability and.
And order demand.
That's great and so are we looking at the substantial demand from genetics, taking until the second half of 2024, or even 2025 or could it be sooner than that.
Thank you.
Can be sooner than that I think fanatics has demand and they worked with us about restarting equipment and the pace that we want to do that and they want us to do that but I think.
Thank fanatics has solid demand as season also the summer is really the slowest period of time, but as the Nf L pics off kicks off.
Particularly regular season, then their demand starts picking up and runs through.
Obviously, NBA basketball playoffs, and that sort of thing.
Great and obviously you will have the capacity to meet the demand should it come right.
I think I think fanatics will have more demand than we have capacity.
They have a <unk>.
Great site and a lot of content out there and we will manage that together about what types of products and the capacity that we can run that and meet the other criteria of time to delivery to their end consumer and quality.
Have you.
And then talking also about capacity if there is.
Theres been obviously a lot of ink spilled about the whole reassuring effect. If there is a substantial reassuring that really happens.
Especially from.
Carmen manufacturing in China.
Do you expect that or I should start with do you see that trend happening or is it still more conversation at this point and companies wanted to hedge their bets, but not actually move into production yet.
So I'd say a year to 18 months ago, we actually saw companies moving production to this hemisphere.
<unk>.
We've seen that.
Slow up a good bit width.
Just the effects of business and the last.
Three or four quarters and so.
And I'd say pricing Asia has dropped pretty dramatically.
It will be interesting to see.
Exactly where.
This trend goes in the ensuing quarters when raw material pricing around the world gets back to a more normalized level and hopefully demand gets back to a more normalized level.
Great and then and then finally just on the balance sheet, obviously, you're lowering your inventory.
And we've talked about the SG&A.
No need I assume to be raising cash at this point.
That's correct.
Okay.
Okay.
Thank you.
Thank you.
Yes.
Thank you and your next question comes from the line of clean Parry from Milena management. Please go ahead.
Hi, how are you.
Hi.
We're good hope you are.
Hi, and thank you very much I have a couple of questions.
<unk> opened a few stores up north.
Last year in New York, and New Jersey. This year I was wondering how these stores are doing relative to.
To your other stores.
And how it impacts your future.
<unk> strategy and the new store locations.
Okay.
Sure we've been extremely pleased with those four stores, we are now anniversarying, a year and rope at beach.
And are seeing continued growth out of that location, which has again performed very well.
One of our New York stores.
Actually we did a soft opening on a Saturday and it was our largest single store.
Sell day in our history, so theres been a lot of demand in the New York area.
We had good shipping data from our e-commerce sites about the New Jersey, and New York.
Population.
Gravitating to salt life and buying our products. So we've been really happy in all four of those locations as they started out.
Yes.
Okay.
So it makes a great lifestyle brand.
So many women tag along with you.
The partnership with furniture manufacturer given that royalty income is 100% profit it would be exciting to see these partnerships in the future.
Is it easy to envision.
Like sunscreen and other products within the fishing and clothing industries can you talk about.
Possible other industries targeting you.
We get a lot of enquiries about partnering with us and people want to leverage the salt life brand.
We are extremely careful in that arena.
Hey, it needs to move the needle for us and B, we need to understand what the.
The distribution will be and probably most importantly, we need to think about how our consumer will resonate with that product or not so our mantra. There is do no harm.
So not taking on the license might dip.
Differ a little bit of royalty income, but what we certainly don't want to do is end up associating with a product or.
A brand that really does it resonate with the salt life customary maybe turns them off on our product or lifestyle approach.
Okay, Alright, thank you very much.
Yes.
Thank you Mr. Humphreys there are no further questions at this time. Please proceed.
Okay, well. Thank you all for joining the call today, and we look forward to a further update at our year end and certainly going into next fiscal year. Thank you.
Yes.
Thank you, ladies and gentlemen that does conclude your conference for today. Thank you all for participating you may all disconnect.