Earnings Call: Q3 2021

Apr 28, 2021

Earnings release

Thank you, Rachel, and good morning and welcome everyone to our Q3 sales results from our Sunny and Unlock Melbourne, I'm glad to say. I'm joined here by Leo Wekett, our CFO. Just a quick reminder that we'll be giving a strategic update in June and our FY 2021 results in August and that the focus today is very much on sales. Given we are cycling COVID, we've incorporated 2 year numbers into our release, I think, for the first time and have been specific about supermarkets' current trading to help paint a picture of how we think local shopping is beginning to unwind. Australia was one of the first countries to be impacted by COVID and is one of the first cabs up the rank in terms of what cycling COVID domestically looks like. I think when I reflect on Q3, there are a number of things to point out. The first is successful continued execution of our strategy. The second is we continue obviously to be in SNAP lockdowns from time to time, and I think we've had 3 now. But the good news is, is they've tended to be 3 5 days long and having less and less impact on our business and in the community at large, which is good. Obviously, we've continued to support communities through those lockdowns and then also as we return to floods in Queensland and New South Wales. I think the most promising aspect of really the end of the quarter and then very much for the 4 weeks that we've just experienced in April is some very strong signs that Australian consumers are beginning to return to more normal behavior. And we've highlighted in the release some of those things. I think firstly on Q3, we gave some very strong guidance at the half year that we expected to be cycling the biggest numbers that anybody has ever cycled. You'll recall that our Q3 last year was the best in our history and one of the strongest in the industry as our supply chain responded extraordinarily well to the increased demand of pantry stocking. What we then saw was 2 prolonged lockdowns, the first of the federal and the second of Vic Government, which had an impact on our business as people moved to local shopping. What we're beginning to see our 4 strong indicators that local shopping is unwinding or beginning to unwind. The first of those is around Easter. You recall last Easter was very Jude. We were in lockdown across the nation. What we saw this year was much higher levels of confectionery sales and entertaining products. So it looks like Australians, by and large, had a happy Easter, certainly happier than last Easter, which was good to see. We're beginning to see we've talked about Coles being more exposed to shopping centers and the metro areas. We're beginning to see customers returning to the CBD as they return to work. And we're beginning to see customers not only returning to shopping centers, but shopping at supermarkets within shopping centers. And that really started to happen post the removal of masks in Victoria, which I think gave people a bit more confidence. I think the Easter holidays and being with more people and then as we start to enter that sort of autumn period being indoors in shopping centers is obviously a bit more popular as well. So some favorable sequencing of events that are helping us as we approach to year end. What we also saw was increased transaction growth for the first time in a year and increased number of shopping trips as basket sizes begin to subside slightly, but more than offset by transaction growth. And what we've noticed is as transaction grows, the impulse categories grows. And so things like bakery, Drinks, confectionery, all of those items increased as the number of shopping trips increases. And then finally, but not least, is that we saw some unusual trading patterns during the peaks of COVID, People shopping on Mondays, well, throughout the week in different ways, less shopping at nights and so on. And what we're seeing now is Our return to Sunday is being the dominant day of the week as people get ready for work on a Monday and the kids go back to school, a much more of a normal back to school period. Just reflecting briefly on the strategic highlights. Growth in e commerce for both supermarkets and liquor was strong, and you'll see that we've increased the percent of sales that they represent, which was pleasing through the period. We continue to focus on range change. There's still a lot of work to do and there's still a lot of work to do in own brand, but we're delighted to report record own brand penetration alongside a very successful program that's working at both the entry price point level, but also on affordable treats at the other end of the spectrum as well. In smarter selling, we continue, which is not the focus of today, of course, but that continues to be on track to deliver 250,000,000 And the construction has started on Victron. So all 4 of our automated sites, the 2 Ocado sites and the 2 Victron sites are now under construction and coming along very well. I think from a Winning together point of view, the highlight of the quarter was not only supporting the flood victims and so on, but launching our Together to 0 strategy, which we did in conjunction with our Moonee Ponds renewal, which has been very successful to date. As far as the outlook is concerned, the main focus there is on supermarkets. And we've said that for the first for weeks of April. We've seen an improvement in year on year sales, albeit in the subdued period last year of 4% and that our 2 year number, which is probably the more important number in terms of trying to look through the impact of COVID, our 2 year number has improved from approximately 7% in Q3 to approximately 8% in Q4. So with that, I might now hand over to questions. Thank you. Thank Your first question comes from David Errington from Bank of America. Please go ahead. Good morning, Steve. Good morning, Leah. Stephen, may I ask this might be for Leah more than you, Steve, because she's always given us a really good update on where you're tracking with regard to COVID costs in the stores, and I know it's a sales result, but it's such an important area. Leah, can you give us a bit of an update as to how you were tracking in that quarter. You said in the release that you're at the low end of guidance. And can you give us a bit of an update with regard to where you're at with the operating Of the stores and the warehouses, as Steve said, the customers seem to be getting back to COVID normal. Where are you at with regards to the operating efficiencies of the stores and the warehouses? Are you getting back toward COVID normality? Or are you Still having to wear a bit in terms of for a little while, get this extraordinary period that we've had to endure through COVID. Thanks, David. So yes, as we said in the release, we are within the previous guidance of up to $10,000,000 per month but at the low end of that. So for the Q3, the costs were around the $10,000,000 mark cumulatively. Within that, we had 2 months which were very low and then we had 1 month which was a bit more elevated. That 1 month that was more elevated Corresponded with the SAP lockdown for WA and Victoria, and that's where you're seeing Additional costs being driven in particularly in the logistics space as we respond to those to move stock to the right places to ensure availability for customers. So outside of the SNAP lockdown incident, We're getting to a stage now where we are getting back to what I would describe as quite normalized levels of efficiency. And really, those costs on a sort of a normal month without those snap lockdowns in place really consist of Sanitizer at the front of store and some extra routines in the checkout areas with wiping down of belts and the screens in between the self checkout units. We are what I would say though, we are continuing to in bets. So while those COVID costs aren't coming through as high as they were in the past, We are, as we sort of messaged our behalf, investing in the business, particularly in the area of e commerce and taking advantage of the ability to generate some momentum in that space. Would it be fair to say, Leah, that you're unwinding the unproductive element of those costs and redirecting those cost savings into more productive areas that should generate growth. Would that be a fair assessment of that statement? That's just as a follow-up. Would that be a fair assessment? I think that's a good way to describe it, David. Okay. And Steve, just finally my question. I remember you've made it's a big thematic that you've been Your store footprint has been disadvantaged in throughout COVID. And I think your 3 biggest stores, I think you've called out World Square, Broadway and Bondi were your hardest hit. You mentioned that you're starting to see some return in the performance. Can you give us a bit of, I suppose a little bit of sugar as to where you're at there, what sort of how much improvement. So I think you said they're not your biggest performing stores were down about 30 odd percent, 35%. Where would they be, those 3 biggest stores down now? What's the momentum going like? Just to give us an idea of normality of the best traders. Okay. Thanks, David. We probably won't go into individual stores on a continuous basis, but I'll tell you about the cohorts, which is that all of the cohorts now with the exception of CBDs are trading positively. And CBD is a very well, is a sort of low negative. So those are quite material changes from when we last reported. When did that start kicking in, Steve? Was that March or when would that start kicking in? It was really the 1st week of Easter. Yes. So it's a starting it's a continued trend. Well, thanks, Steve. Thanks, Leah. That's really helpful. Okay. Thank you. Thanks. Thank you. Your next question comes from Ross Curran from Macquarie. Please go ahead. Hi, team. It's Ross Curran from Macquarie. I appreciate your time this morning. We've got an extremely volatile trading period we're going through at the moment. Can you just help us understand how April trading might look relative to May June last year, given the lockdowns over those periods and increased consumption that we saw in May 2020 June 2020. Yes. Well, good morning, Ross. I think the best thing And what I can guide you to is to look at the Q4 sales results last year and then we've given you the a very strong indication of what our results were for April. We've also, I think for the first time said what our 2 year performance is. So I'm much keener to sort of look at the 2 year 8% number than I am looking at month to month at the moment because as you say, it was very volatile. So I'd sort of be looking at that on a future basis. And then the only change to that is probably next financial year when there was another kick on as the Victorian Lockdowns happened, but that was really very much the end of this financial year and the beginnings of the current financial year. I think maybe just to add on that, Ross, if I could. I mean, if you look back at last year, just at the events that occurred over that Q4. In April, you had Easter. And if you remember back, none of us were really allowed to celebrate without families. And so it was quite subdued. And at the same time, we had the pantry the unwind of the pantry stocking that had occurred. So a lot of people were kind of Working through the pasture and the rice and the stuff that they had bought during the panic buying period in April, and we were seeing that sort of destocking occur. You then moved into May June where we were essentially under sort of national restrictions across the country. And that was when we really started to see the shift from out of home consumption to in home consumption, which led to strengthening of the grocery sales. So there is quite a bit of volatility through that period in terms of the strength on a sort of month to month basis with April being the most subdued because of that Easter and destocking effect, which is why we're sort of trying to offer up the 2 years as a way to kind of look through that year on year volatility. So what you're saying is that an 8% on FY 2019 is a better way to think about it than growth on calendar 2020? The year on year, they're going to be very volatile. Yes. Then the second question is for Rad Liquor. Can you just help us understand what's happening in the Liquor business? So you saw quite again, quite a sharp slowdown over the second half of the quarter. Yes. So What we've noticed throughout the various lockdowns is that liquor followed Supermarkets, so supermarkets had the initial spikes and then liquor. And then what we noticed with the restrictions is that liquor The liquor market benefited far more from the restrictions than the supermarkets market did. So what we should see as we move forward is We're going to head into that cycling. So if you look at the supermarkets market last year, It grew by more than 10%, most of which was COVID related. If you look at the liquor market, it grew by well north of 20% over the equivalent period of time. So Liquor is going into a different sort of cycling. It's later, but it's bigger. But the underlying performance in liquor, We believe is strong from a customer metrics point of view like in supermarkets and people are responding well to to the new initiatives there. Thank you. Okay. Thank you. Your next question comes from Michael Simotis from Jefferies. Please go ahead. Good morning, everyone. The first question from me is just on Easter. You've spoken a little bit about the confectionery sales and Sales growth you saw in the entertaining categories. Was there much of that in the Q3 or did you see it predominantly in April. No, there was not a lot in Q3, but it did start with Easter. And as I say, I think it was very helpful that the government sort of We decided to take the masks away as mandatory in the week before that as well. So I think that was helpful in the whole process of things, particularly here in Victoria. And for us, Michael, that Easter was sort of the 1st week of the Q4 period. Yes. Okay. That's a good confirmation. Thank you. And then the second question for me and just relating to the food price indices that you provide turning negative. There's a lot of discussion globally from FMCG players about some fairly material price Inflation coming through. I'd just be interested on your thoughts around pricing in the market and Coles Relative pricing, particularly in the context of some of the media coverage recently around Potential for price wars and aggressive price investment from Coles, etcetera. To me, it looks like the market has been very rational over the last a couple of years or so. Just be interested in your views on that dynamic and how that plays out, please. Yes. Thanks, Michael. I think the our customer metrics are in a very good space as they were when we reported at the half year. So telcoals is at record highs. And what we've seen throughout out the year is that availability continues to improve from the various things that have happened as we went through COVID and bushfires and floods and so on. I think from a pricing point of view, again, we're in a place where customers think we are good value. Obviously, we're not static in that regard. We're always trying new things. We obviously brought Dan, Dan back in a few weeks ago or reemphasized it and we've been putting more lines onto that since January. Obviously, it's a very powerful marketing campaign that people understand. But alongside that, the biggest thing that's changing all of Tyme is our own brand offer and that's what we've said we want to differentiate on and we've hit a new high this quarter of 31.6 center as we head towards 40%. So the own brand acceptance is gaining momentum both at the entry price point level and at the more affordable luxury end of the spectrum as well. As far as the deflation is concerned, what we said at the half year about current trading up to February was that What we've seen is that Victoria was very subdued as a state. And obviously, we talked about Victorian population at the time, it appears that since then some Victorians have returned to Victoria and from interstate and it also appears that People are moving back to metro from rural areas as well. And then we did talk about the beginnings of deflation in vegetables, which has continued based on supply and demand because the growing season is in good shape because to one side. And then what we've seen is we are cycling or we were cycling in March, obviously, A lower promotional intensity because of the availability of branded products and that's also had an impact. So if you look at that deflationary number, it's broadly half to do with promotional intensity and half to do with deflation in produce. So we'd expect some of that grocery number to unwind slightly as we head through this quarter, But we would expect the produce to not change materially. As far as cost price increases are concerned, clearly, We're in an environment at the moment where we've got a reasonable Aussie dollar. We've got fairly low levels of inflation and wage growth, but areas that obviously are ramping up for things like shipping costs, but that doesn't really impact Coles as much as others because more than 90% of What we sell is grown or produced here in Australia. Good color. Thank you. Thank you. Thank you. Your next question comes from Grant Saligari from Credit Suisse. Please go ahead. Good morning, Steve and Leah. Thanks for the opportunity. Maybe just first of all, just to follow on from Michael's question on price. Do you believe that there is actually a price gap that you need to close? And is your intention to get there through down, down in Kohl's branded product or is this more part of just the normal progression of the Kohl's strategy? No, we don't believe we've got a price gap that we need to close. We constantly believe we can offer better value and that's what we try to do. But pricing, We look at pricing in a number of ways. 1 is day to day pricing and then the other is pricing, including promotions. But whether it's promotions, day to day pricing or your own brand participation. All of those have a factor in people's The price perception, so we're constantly trying to manage all 3. And obviously, what you want to try and do is to get the best out of your actual price position from a perception point of view, and that's obviously what we try to do as well. But I think it's an everyday thing for us, making sure that we are constantly focused on improving the reality and perception of our price position. Okay. That's helpful. 2nd, can I ask about your own brand penetration because It's almost a truism that if you put own brand on the shelf, then the sales are going to go up? What I'm interested is, can you provide any color on the productivity, sales productivity of your own brand product qualitatively. Whether you measure it on a unit of shelf space basis or wherever you measure it, is that going up at a pass enough rate to justify the continued shift into Home brand. Yes. Well, first of all, Own brand, the purpose of Own brand is not all about on the shelf productivity. If it was just about that, you'd probably end up with a small store in a small range and make yourself a Put on a pallet and call yourself a deep discounter. So what you're trying to do with Range is to make your stores more appealing than anybody else's overall and more differentiated. So the purpose of own brand is certainly at the entry level to offer Significantly better value because you haven't got the marketing costs and all of those type of things. And then at the premium end, What you're trying to do is to offer unique products that you can't buy anywhere else that people come back to the store for. And so that at that end of time, you'd be talking more about Things like Laurent Bread where you can get 30 hour sourdough for several dollars less than you'd be able to get it for from a specialist high street Baker. So the first protocol is, is it differentiated? Does it sell? Is it better value? All of those type of things. In terms of shelf productivity, there are own brands that have better shelf productivity than the brands. And then there's other areas where the brands would be higher than the own brand. It's still fair to say that And brand penetration in the fresh foods area is still materially higher than it is in packaged goods. But then when you look in packaged goods, there's some categories where it's very high and others where it's still emerging. But I don't think you can sort of look at it as an average. What we're trying to do in Coles is de average things as much as possible to find out which of the stores we need to improve most, which of the products we need to improve most, all of those type of things. So it's just not the way we look at own brand. Every product has to pay its way, of course. And if it turns out to be not a performer, then it gets replaced like a brand would. But the overall own brand strategy is not about shelf productivity. It's about the appeal of the store overall and differentiating the offer versus competitors. It would sound to me like it's a drag on your sales numbers in a dollar terms, so from what you're saying. Sorry, Grant, I couldn't quite hear that one. Can you just repeat it, please? From the way you Describe that it would sound like own brand penetration is somewhat of a drag on your total dollar sales growth. Well, it depends I mean, certainly, if you're looking at an average of averages, then If you sell up more own brand, then you've certainly got the equivalent volume, but you'd have a lower and sales value, but it really depends what it is. So if we're selling a the Laurent bread for $6 and the average bread value might be 3 in the category then you've added $3 to your sale if you convert someone from a standard item into a premium one. Okay. All right. Thanks very much. Okay. Thank you. Thank you. Your next question comes from Brian Raymond from Citi. Please go ahead. Thanks, Scott. My first one was just on the profile into April and how you and really the drivers of that. Obviously, a step up there is not surprising given the trends in industry growth. But just thinking about the magnitude of the uplift you've seen. How much of that do you think is the industry growth accelerating on a 2 year year versus your market share losses narrowing? Or is it a combination of 2? If you could give some color on that, that would be really interesting. Yes. And again, I don't particularly want to make a 5 year plan into a weekly sales report. But If you look at the quarters to start with, the quarter that we had last year was the highest on record in Australia. So you'll remember that I think Coles was 13% or something, which was ahead of the industry. And so we were cycling very significant comp sales. What we said at the half year was that month on month our market share was stable coming out of the 2 lockdowns. And really what we're saying now is that the 2 year number at Coles is improving slightly, but you're always up against a prior year number, which is going up and down. And to the best extent possible, when we look at Market share numbers are month on month, not year on year, but our month on month market share numbers are stable. And then when we look below that, we can see that, as we've said, transactions and customer numbers are starting to improve as that shopping goes from 1 or 2 bigger shops a week into 2 or 3. But I think the most important thing to take out of the results is that it's the first time we've really seen any evidence that the local shopping phenomenon, which is the biggest phenomenon during COVID, that the local shopping phenomenon is beginning to and wind. Okay. Thanks for that. And then just on we've spent a lot of talk about the Inflation figure, I mean, the way I view it is on a 2 year view, it's the CAGR deflation. CAGR inflation is still Reasonably help you if you have a 1% on your numbers. I'm just interested more in the percent sold on promotion versus pre COVID levels. Obviously, we saw promotions get pulled out of the industry during COVID given availability issues. So Getting that period, which will distort the year on year figures, how would you describe the promotional environment currently versus, say, pre COVID levels? Is it improving, do you think? Or is it getting a bit more competitive out there? Yes. Good that's a good question. We saw Promotional intensity increased during the course of and I'm talking month on month again now rather than year on year. Where we saw promotional intensity increase during the quarter, but then we've seen that sort of come up a bit in April. And certainly, we've seen a bit more of a focus on everyday pricing and so on. So where is that currently is probably nearer where we were tracking pre COVID. Excellent. All right. Thanks, guys. Thanks, Brian. Thank you. Your next question comes from Ben Gilbert from Darden. Please go ahead. Good morning, Steve and Liam. Just First question for me. Just in terms of the shopper trends, when you're out there sort of listening and doing surveys and understanding what they're seeing, You're starting to see more of a lean or tilt towards value from shoppers. But I know through COVID, the Audi's kind of thing is a bit more challenging as well that More heavily skewed private label retailers are sort of ones with more of a value tool probably haven't been in as strong a position. Are you seeing maybe people A bit more of a value to your capital sustainability to benefit you guys given you've got a stronger private label offering or larger private label offering than your biggest competitor. It's interesting and I thought we would have seen probably a bit more than we have seen. What's been true, I think, through the COVID period is that When we look at our store cohorts, so whether it's they're more value orientated format Cs or whether it's As, That value format has held up pretty well throughout. And If anything, it's more the other formats where we've seen a bit of weakness as I guess people have had the chance to move interstate or into the country and all of those sort of things. So our shopping center stores tend to be in more average and above average cashments. So if you look at the sort of Bondi's and the Southlands and those type of things, and we've seen those come back. So to your point, I think we're well positioned with our own brand offering at both the entry price point level and at the affordable luxury end of town. But we haven't yet seen what we'd call A massive shift into value more across the board. That's And just second one for me, just looking a bit more medium term and maybe just more recently too, is just around data and how you guys feel that you're leveraging your loyalty data. And do you think that there's an opportunity to step that up significantly, to your partnership with Flybuys? Just just on how you feel that's performing, whether you feel there's opportunities to step that up and potentially even sort of utilize that to bring more dollars in around some of these alternative revenue streams of the business. Yes, good question, Ben. I think there's always an opportunity to do things better. There's No question about that and that's the question we ask ourselves every time we meet. I think The good thing is that when I look at the Flybuys performance, I think we're at record scan rates and record sales participation of Flybuys. So Flybuys is alive and well as a consumer card, if you like, and program. They do like it. And clearly, what we're always trying to do is to make sure that we have better data analytics and so on, both in flybys and in Coles and the number of team members involved at flybys and Coles that's involved in all those areas It's growing rapidly. So clearly, it's an opportunity for the future, and it's clearly something that we want to continue to improved, but flybuys as a program is very popular and it appears to be growing if you look at the transactions and participation within our overall business. Just a follow-up here very quickly, Stephen. Just I noticed that they've been doing some more things by partnering with Kana, etcetera, recently. It seems like they're doing a bit more Do you feel that they're in a stronger position now, sort of ready to step up? And as you said, they do deliver a lot of value, but to do a step change in value for you guys? Yes, the support from Wesfarmers and Cowles is significant for Flybuys. And over the last 2 years since the merger, Flybuys has moved out of the Kohl's support center. For the first time in the last few months, it's been able to sort of get into its new CBD office. So I think we started renting that in the middle of last year and no one's really been able to sort of go in. The team is growing significantly at Flybuys. And obviously, they're looking at partners that will grow the overall consumer proposition and the that buy now, pay later one is obviously something that's very popular with consumers in the general merchandise space. So yes, I think you'll see over time more partners joining and flybys to create a better position for customers. That's really helpful. Thanks very much. Thank you. Your next question comes from Phil Kimber from E&P. Please go ahead. Hi, guys. My question is just around clarification where you talked about the cohorts, I think you're talking about the Shopping center stores and the CBD stores, sales are now positive since Easter. Can I just say something like CBD, I assume that's cycling pretty big Negatives for the same period last year? I just wanted to get a sense of the base that they're coming off when you say that now turned Positive or I think SABDATA is still slightly negative? Yes. I mean, it would be Thanks, Phil. It would be a lower base, but you've got to start building from somewhere. Certainly, it's different by CBD as well. I was in Sydney CBD recently and absent the tourists and the backpackers, the rest of It looked like it was pretty busy and certainly going into Melbourne CBD, it's starting to get busier. So I think if you took our Melbourne CBD out of things, the rest of the CBDs year on year would be growth again now, which is good, but as you say, off a relatively low base. Yes. Okay. And that's just really since Easter, maybe talking about those numbers. Yes. Yes. And then my second question was just a clarification on Sales per square meter, which I think is up 2.9%. The footnote says it's on a moving annual turnover basis or an exit run rate calculated on rolling 12 months of data basis. So do you actually state which one it is? Is it MAT or is it an exit run rate? I just wasn't sure which basis you were using for sales per square meter. It's the 12 month rolling basis, Phil. In later remarks, we'll be happy to pick that up with you afterwards. Just talk through the technical calculation of it. It's 12 months. It's not an annualization at exit. Yes. The 12 month probably. Yes. Okay. That's right. Thank you. Thank you. Thank you. Your next question comes from Richard Barrick from CLSA. Please go ahead. Thanks. Hi, Steve. Hi, Leah. Just a sort of a quick one, I guess, is clarifying some of the stuff that's already been touched on. When you're talking about normalizing human behavior. What details can you share in terms of what that actually means in terms of market share? Obviously, we're interested in how Coles is tracking versus the other supermarket operators. But can you also a bit of color more broadly in terms of perhaps versus some of the specialists, grocers and butchers? I would have assumed that there'd be a bit of a swing back to those guys as well if behavior is normalizing, but just love to hear whatever color you can give. Yes, thank you. As we've well, first of all, there's lots of market share numbers that are out there. The ones that we tend to focus on and report on those ones every 6 months, which I think we're the only company. It might be the only supermarket in the world that does that, by the way. We don't Get a great deal of recognition for it, but we did we do actually sort of try to help everybody with what's the market doing and how we're doing because We said over the 5 years of the plan that we wanted to at least maintain or grow our share and that's what was happening as we entered into COVID and then we've seen this local shopping. What we said at the half year when we last reported was that The 2 long lockdowns impacted our share and then what we saw was either a gradual improvement and share a month on month for stabilization and that's what we've seen for the data that we've got so far that relates to calendar 2021. We will report properly on more of that either at the Strategy Day or at the full year results. But as far as we can tell, things are stable all improving. And certainly when we look at the customer numbers through flybys or The data that we've got, then it feels like we are returning to a bit more of a normal. I think with regards to how everyone else is doing, that's probably best directed at other people rather than ourselves. I'm always happy to report on how we're doing, but I'm not here as a commentator on how everybody else might be doing. Okay. We'll run a bit more of that tomorrow and look forward to a more fulsome update at the Strategy Day in June. Thanks, Richard. Thank you. Your final question comes from Niraj Shah from Morgan Stanley. Please go ahead. Good morning. You've obviously provided a lot of good color on sort of the store footprint and how that's impacted your relative performance. I think online has been another point of difference. I'm just curious, do you think having 2 websites and a non transactional app, I suppose, is a big Part of that and just a reminder on when you expect to consolidate the websites and launch a transactional app. Yes, good question. There's clearly a benefit from having everything in one place, because there are people who go to the company website to see what the catalogs are or what the opening times are or what the recipes are versus those that go to the shop online. So there's clearly a benefit in terms of getting more people to transact by bringing everything together. And we haven't said when that will be, but it will be later in the year. What we are doing In the meantime, it's constantly improving both our website and our shopping app. And that's clearly coming through in the customer The feedback that we're getting, that things are getting simpler and easier all of the time and that Our, what we called, perfect order rate continues to improve. So there's a lot of focus on making sure we've got a good online offer. And then obviously, we'll bring everything together later in the year. But we think that the performance both in Food and liquor for the quarter, it was a solid one and looking forward to talking more about that in June in terms of how we're continuing to progress. Okay. And apologies if this is the follow-up is a better for June as well. But Kroger at their recent Strategy Day indicated sort of a profile on profitability for the CFCs, Steve, I think breakeven in years 2 to 3 and then profitability in line with the stores by year 4. Jing, would you be expecting a sort of similar profile for the ones being built for you? But we're not at all privy to what terms and conditions Kroger has signed up to. And I suspect that Everyone's terms might be a little bit different. I think people have got different numbers of modules. People have got different splits between home shopping and click and collect. So The only thing I'm focused on when I see what other people are doing, whether it's casino, Kroger or Sobeys is what the Customer reaction has been and whether it appears to still be best in market. And as you know, we signed up to Ocado, just over 2 years ago, we believe that central fulfillment is a key part of the platform. And we believe that automation is key in places as well. And certainly all the feedback we've had so far is that Ocado is still by far and away the best automated offer anywhere in the world, because it has the widest range on offer anywhere in the world and it has the best delivered in full on time. So that's the thing I'm sort of focused on the profile versus Kroger. I wouldn't read into that sort of Too much clearly, like all the automation projects you open as an investment and then they pay back over time. Well, that's the certainly that's the expectation. And how long that is, we'll probably talk more about in due course. Fair enough. Thanks for the color. Thanks. Thank you. There are no further questions at I'll now hand back to Mr. Kane for closing remarks. Okay. Thank you, everybody, for your questions this morning. No doubt you'll be in touch with the team if you have any follow ups. I hope you all managed to have a better Still like most Australians did, we're really looking forward to seeing you in Melbourne in June to talk a little bit more about what's been achieved at what will then be the 2 year annualization of our strategy. We'll talk a little bit about the new initiatives that are currently taking place, but also talk a bit more about how the plan is evolving over the next couple of years. So we look forward to seeing you all then. Thank you. Thank you. That does conclude our conference for today. Thank you for participating. You may now disconnect.