Earnings Call: Q1 2022

Oct 20, 2021

Earnings release

Thank you for standing by, and welcome to Endeavour Group's F22 First Quarter Trading Update. All participants are in a listen only mode. Endeavor's CEO, Steve Donahue, will provide some opening remarks followed by a question and answer session. Only one question per person will be permitted. However, if time permits, participants are welcome to rejoin the question queue. I'd now like to hand the conference over to Mr. Steve Donahue, CEO. Please go ahead. Thank you. Good afternoon, everyone, and welcome to Endeavor Group's 1st quarter trading update. I'd like to begin by acknowledging the traditional custodians of land on which we're based here today in Surry Hills, the Gadigal people of the Eora Nation And pay my respects to Elders past, present and future. I'd also like to welcome Shane Gannon, our CFO, who's also with us here today. I'll be providing a short overview of the trading results for the quarter and then Shane and I will take a few questions. The Q1 of our financial year covers the period from the 28th June through to the 3rd October. And as you're all aware, there's been significant restrictions in place across this period, most notably lockdowns in New South Wales and Victoria, along with a variety of other trading restrictions across the country. Through the quarter on average 40% of our hotels were closed. As a national hotel operator, this has had a significant impact on our business. Sales from our hotels were $282,000,000 in the quarter, which was down 9.9% when compared to the same quarter last year. And you might remember that COVID also impacted on trading in Q1 of last year when Victoria experienced its extended lockdown. To provide some further context on the impact of COVID, our hotel sales were down almost 40% when compared to F 2020. Despite these immediate challenges, we've continued to look to the future and have continued to invest in hotels. We've accelerated the rollout of our order and pay capability which has actually had great customer take up when our hotels are actually open as well as having rolled out a new time and attendance We're pleased to complete the acquisition of the Terry Hills Tavern, which we referenced as part of our full year results and we've subsequently Acquired the Manly Hotel in Queensland. These acquisitions included 5 accompanying retail stores that have been added to our BWS network in the quarter. So turning to retail, sales of $2,654,000,000 were recorded in the quarter. This is in line with the very strong sales of Q1 and 21 and up 21.4 percent on Q1 in F 2020. Pleasingly sales were strong in each stake indicating that our sales resilience is Not entirely been a consequence of on premise closures. Our retail team were able to deliver improved customer engagement even while navigating changing trading patterns. Customer engagement during the quarter as measured by our BOP NPS scores was up 3 points for both BWS and Dan Murphy's. Our online sales grew 34.4% when compared to the prior year and this represents the penetration of 11.5% of retail sales in the quarter. Notably, the on demand delivery services offered by Dan Murphy's and BWS saw heightened demand particularly from customers seeking more premium products. During the quarter, 10 BWS stores were opened including the 5 that I mentioned and one store was closed bringing the total BWS store network to 1401 stores And reaching that milestone of 1400 BWS stores was really caused to celebration across the whole Endeavor Group. Dan Murphy's store network ended the quarter with 253 stores following the opening of 2 new stores, 1 at Fisherman's Bend in Port Melbourne and the other at Bato Bay in New South Wales. I want to acknowledge the enormous effort from our team during the quarter across all of our businesses. We've continued to support our teams with vaccination leave. We've also had vaccination hubs operating in New South Wales and Victoria and we've supported team members who were required to isolate during the period. It was really fantastic to welcome patrons back to our New South Wales Hotels last week, most of which had been closed for 105 days. And we look forward to similar celebrations in Victoria in the coming days as they too emerge from their extended lockdowns. We're also looking forward to operating With our entire network actually open, particularly as we come into summer and then through to the New Year, which I'm sure everyone on the call is looking forward to. As we referenced in the Q1 announcement, we anticipate our trade will continue to be impacted by COVID restrictions. And additionally, There are some ongoing challenges in both team availability and supply of product, which we'll continue to monitor and respond to. Having said that, with our hotels open and opening and only 66 days until Christmas, there's definitely a renewed sense of excitement and optimism across our business. We're focused on delivering a social and safe experience for all of our customers over this important time for everyone. And I really hope that we can welcome each of you back to enjoy our hotels, Our stores, our wines and our wineries over the coming 1st year period. Appreciate you joining the call today. Thank you for your time. And I'd now like to hand over to questions for both Shane and I. Thank Your first question today comes from Michael Smotis with Jefferies. Please go ahead. Good afternoon, Steve and Shane. My question is on the data point you shared for the retail business Outside of the lockdown states. So you said up 17% on a 2 year basis. Can you talk about what Your on premise business did in those states because when I look at the numbers you've reported and the number that you had closed, It looks like it probably wasn't that far off normal to me. And with that in mind, why do you think Your retail sales are still so elevated in those states. Thanks, Michael. Appreciate the question. I might come to the second part and see if we can bring any more color to the performance of hotels on a state basis. We're just shuffling our focus to get to that. But To answer the second part of your question, I think a combination of the digital offer We've been able to build over a long period of time and the fact that customers now understand that there's multiple ways to shop us and they've become More familiar with the more convenient options. So as referenced in the announcement, our preferred our most Popular shopping method for customers coming to our store is that contactless to boot pickup, and that's reflected in those NPS scores. Further to that, the most preferred shopping method from home is express or on demand delivery. And I think those two things are Somewhat unique. There are other competitors doing them out there in the market, but certainly, I think that our scale and Like to think that the quality of our offer whilst we work hard on trying to continue to improve it are a couple of the things that have kept customers coming back. The thing has also done a lot of work on range in the last quarter. Well, probably the last half and a lot of that's come to fruition in the last quarter. And we're seeing some real pops in areas like seltzer, in areas like Rose and we've got relatively unique offerings In that regard in those categories. So I think some of those fundamentals are playing out in our favor. And I'm going to ask Shane, who's got some Specifics that we'd be happy to provide on the hotel performance. So anything you'd add, Shane? Look, it may be better if we come back to on that. I'm just Looking at the stats and there's probably a fair bit of detail there. So if you don't mind, Stuart. No, no worries. I'm not asking the question, Michael, obviously. So we might come back from you on that, Michael. Suffice to say sorry, let me just go on. Suffice to say that where hotels Have been able to trade they've been trading quite well in general terms. We've been pleased with the performance of hotels in Western Australia, for Well, and I think that points to the fact that there's no international travel obviously and people are very much enjoying the hotel experience. So We can probably come back with a bit more color for everyone on that topic in due course, but I think in broad terms people are continuing to enjoy the hotel experience. Thank you. Your next question comes from Grant Saligari with Credit Suisse. Please go ahead. Good afternoon and thanks. My question on the Hotels business. Could you indicate with the reopening in New South Wales and the prospective reopening in Victoria, at what sort of level of capacity Utilization relative to sort of pre COVID levels, you'll be able to operate those hotels in all terms, please? Yes. We're still operating a 1 in 4 Square Meter in New South Wales at the moment. And over pleasingly you can now drink Standing up, which does make a big difference. There is a variation of restrictions on a state by state basis. And as I said before, Each one of those restrictions does have a direct impact on our trade, but it would be fair to say that people Came back to New South Wales Hotels with gusto last week and we saw very strong performance across All areas of the hotel office with perhaps the exception of accommodation because people are just not traveling yet. But there was a real desire Particularly on the Monday to get back to the pub and we saw them very well attended right across the state. So As has been the case for as long as COVID has been around now, there is a direct correlation as I say between a 2 square meter versus a 4 square meter drink standing up, Can only drink sitting down, can only have 20 people in the hotel, which is actually the case for us in Victoria at the moment And consequently results in us limiting the number of hotels that are economic for us to open and that's of course going to change next week. But as these Restrictions change, so do the performance of the hotels that are affected by them. Thank you. Your next question comes from David Errington with Bank of America. Please go ahead. Hi, Steve. Hi, Shane. Steve, can I get back to Michael's point and draw it out a little bit more? Because I think it's Key point that I mean, if we go back in time, your 2019 year was to your not so It's certainly Brad, I think that's when Brad brought you into the business. But your 2019 year was a very disappointing year for liquor retail in particular. You were misfiring on a lot of ranges. And then in 2020 2021, we couldn't really judge your performance that well because of COVID. The number that Michael called out, I think, the 17% growth over a 2 year period in the non lockdown states It's certainly probably the cleanest number that we've got to see how your business is performing On a like for like cleanish basis. So to sort of like elaborate on what he was saying, Is it hotels people aren't going back to hotels in those areas? In other words, there's a reluctancy to go to hotels. So consequently, retail sales are elevated or are they going back to hotels at the rate that they were previously, But your sales in retail adjust better because you're doing these things at a significantly better rate. And hence and what are these areas such as digitalization and customer traction that others can't do, I'm assuming a very Premium offers and higher margin, I know it's not a profit number, but it's a sales number. But it seems to me that your business So Dan's and BWS has significantly stepped up. So your sales are better despite customers going back to hotels and it's a lot better higher quality business. Can you elaborate a bit further on that? Because I think that's a very, very important point out of this quarterly sales. Yes. Thanks, David, for I think the question itself just demonstrates how much complexity there is in looking back through the numbers. But I guess I would say Hotels, you look at markets like Tasmania up until the recent lockdowns in Western Australia, they have That's really came back after lockdowns had taken place. And I think that's because we've got customers confined to their states and Finding the numbers of experiences that they can have. But you are spot on as it relates to premium In terms of customer experience and product demand. So a lot of the growth that we're getting is coming from more premium products, Put it that way. And certainly, Dan Murphy's has the largest range of premium products in the market. And so that's probably been A beneficiary of that customer trend. It's also played out similarly inside hotels in terms of An expectation of a premium experience, let's say, when it comes to a cocktail, for example. So we're continuing to see significant increases in demand for cocktail. But Most of the or a lot of those increases are connected to the digitization of the experience or the convenience provided Through the digital platforms we provide. So by that I mean, as we've rolled out our order and pay a table capability in hotels, That's driven an increased demand for cocktails because you sort of lay out the cocktail menu in front of the customer and they want to treat themselves and therefore do so. In the case of retail, I mentioned the significant the ongoing significant increases that we're seeing in our Digital demand, our e commerce demand, the key driver behind that has been on demand delivery services. So that's our Fastest growing segment of e commerce and the fastest growing element of on demand delivery has been premium products. And by that I mean Wines over $50 a bottle, spirits in the vicinity of $100 a bottle. So what we're seeing is this real emergence of Indulgence linked to immediacy. I want something really good and I want it really quickly. And that customer trend is very aligned with I think both The capabilities that we've instilled into the business from a digital and logistical standpoint, but also links back to the product That we've been able to offer our customers. So it's quite a big trend. Thank you. Your next question comes from Sean Cousins with UBS. Please go ahead. Thanks. Good afternoon. I guess just a question on the Comments regarding labor availability. Can you just talk a little bit about the costs that you're having to incur? Are you having to pay Start to attract pay more to staff to attract them and have you had to pay staff while Pubs have been closed so that you're confident of retaining them upon reopening them. I was curious around how this labor availability issue you've highlighted Plays out on a cost basis to some degree please. Yes. Thanks Sean. Appreciate the question. I think we were really proud actually to be in a position to be able to support every one of our hotel managers through all of the And keep them on. And that was I think important for them and important for us because they're key critical talent and operating a hotel Requires quite the knowledge of the site itself and obviously the patrons they're in. So that's the first thing I'd say. We were Very, very pleased that our hotel management team stuck by us and they're now in the markets we're operating I think very pleased to be doing so. So That's the first one. The second thing to say I suppose is that we're not necessarily seeing wage pressure. I think that's what you were intimating or referring to, we're just finding it challenging to find people to fill the roles that we're talking about. And there's a whole Dirth of roles that need people to fill them like shipping roles or supervisory roles and so on and so forth. And A lot of those require certification, they're sort of skilled roles. And one of the consequences of COVID, I think, is that people have pursued other options or they're Still in a position where they choose not to work. So I think we look forward to seeing that rig come back to a degree of normality. Certainly In due course too, we'd like to think that some of the 457 Visa holders that were able to participate in our business historically will be able to do so in the future. But it's a question of I guess being patient and also helping people understand the positive career that you can have in both the hotels business and the retail business. Thank you. Your next question comes from Kegan Boysen with Jarden. Please go ahead. Good afternoon, Steve and Shane. Just one for me, just on the inflation outlook, given a large portion of liquor is imported and sort of what we're seeing across other retail categories, Just to get a bit of color on how you're seeing the environment over the next few months? Thanks, Kean. Appreciate the question. Yes, I think inflation will be what it will be I suppose. But when you look at the challenges that anyone trying to import anything into Australia, let alone Products that we sell is facing then I think we can all recognize that costs in that regard are increasing. We as a percentage of the total Drinks that are sold in Australia, I think we have a lower penetration of imported product than certainly some other categories if you look at across food and other segments. So we'll have a balanced exposure in that respect I suppose. But I think the good news here is that If there are challenges getting imported products then in highly substitutable categories like ours where people have quite broad repertoires, You'll see them switch back into Australian products, which is arguably good news in that instance. But it's very hard to tell what the with any sort of precision What inflation is going to look like, we just know that we are facing challenges on a few fronts with respect to international shipping and availability associated with that. Thank you. Your next question comes from Ross Curran with Macquarie. Please go ahead. Hi, team. I'm sorry to come back to this, but once I get back to Michael's point, Maybe can you give us a bit of a color around when the hotels are reopening, is the mix going through the hotel, the gaming slash Is that the same as it was pre COVID or are you seeing gaining over trade in those states now? Hi, Ross. Thanks for joining and thanks for the message. What we saw in New South Wales last week was significant elevation across Gaming, bars and food. And I was actually thinking that food would be a slower catch up, but I think by nature of the fact People really wanted to spend a lot of time in hotels last week in New South Wales at least. There was a better pickup in food than we'd expected. The shift really comes when you take accommodation out. Now accommodation will vary from anywhere from sort of 1% to 4% of the mix and that's the Once you take that out of the equation because it's still in the New South Wales context at least in the 1st week was running at very, very low occupancy rates. So The shift really is 3 to 4 percentage point gap that's washed out evenly back across the other drivers. But The important point is that everything lifted with the exception of the call. Thank you. Your next question comes from Tom Kyris with Berenjoy. Please go ahead. Good day, guys. My question is on Pinnacle Drinks. I'd just be interested in what growth you've experienced there. And With the oversupply Aussie wine market what you're kind of thinking in terms of what your plans are in the near term to grow that business? Thanks, Tom. Appreciate the question. Yes, look our Pinnacle Drinks business has continued to Resonate with customers, I suppose, in terms of the brand offerings that are provided through our retail stores and somewhat through our hotels as well. I think what's been Nice for us and is clearly the comments that I was sharing before about indulgence is that nestled inside our Pinnacle Drinks business is a portfolio which we refer to The Paragon wine estates and they're the very best wines in our portfolio and consequently they are generally speaking the most expensive wines in our portfolio. And they've benefited From that sort of trend that I was talking about before with indulgence. Now having said that, they are relatively small share of the overall business, but It does go to show that in areas where Pinnacle and Paragon therein has traditionally under indexed in terms of our mix of business, Customers have really sought them out and it's off the back of things like Oak Ridge 864, 2019, Pinot winning James Halliday's Best wine best Chardonnay in Australia alongside the likes of Penfolds Yatana and Lewin Estate, both of which retail for over $100 a bottle, whereas Oak Ridge is sort of in the sort of $80 to $90 a bottle mark. So it's somewhat recognized as affordable indulgence if you like in contrast to its peers there. So that's really the pinnacle story in the quarter. In terms of your other the other part of your question as far as access to More premium products concerned. I did touch on that in our full year results, but and not a lot Changed obviously given that we haven't really had vintage if you like and that's often the catalyst for the most change. But with One of the steps that we took in the last couple of years was to stop selling our most premium old vine fruit back into the market and start producing wines ourselves From that very old vine fruit average age 60 to 100 years. So you see that reflected in our Crondorf range and as wines like Crondorf and Riddick have grown in popularity, we've been able to go back into the market and source very premium grade fruit, Predominantly B and C grade fruit in both the Kunawarra and Barossa regions that have augmented the availability of the most Your next question comes from Craig Woolford with MST Marquis. Please go ahead. Afternoon, Steve. I was just going to change Takabeek. There has been a bit of M and A activity in the hotel market over the last couple of months. It looks like a couple of the hotels would have been hotels that Endeavor would find appealing, large blocks of land, suburban hotels, But you haven't been successful. Can you just comment on the activity in the hotel market and how you're approaching some of the potential Sites that are up for sale? Yes. Thanks, Craig. Appreciate the question. You're right. There is obviously continuing activity in the hotel market at Probably unforeseen levels. So we as I mentioned have been able to secure 2 hotels in the quarter and I said at the full year that Last year, we'd only managed to add about well, we added 5 hotels to the portfolio and a lot of those came late in the year. So Our aspiration was to do considerably better this year. In context of the market, noting that we were always going to take a very disciplined approach to that, given that We've got in excess of 3 30 hotels in the network today. So we've got continuing opportunities to It reflects back into ourselves and determine whether we get more bang for our buck given market conditions out of improving our network. But we do participate to your point in any hotel that comes onto the market that We'd meet our expectations in terms of format and we've continued to do that and we have been under bidders if you like or at least expressed interest In some hotels which we haven't been able to secure, but we actually feel okay about that because we know it's a very fluid market and that There are other opportunities on the horizon that we continue to engage with the market on. So I think it's a reflection of the Discipline that we really do intend to continue to apply here to our capital management and it can be a bit of a heady category, the hotels category, whereas we're obliged to take a very circumspect perspective on it. Thanks. Thank you. Your next question comes from Phil Kimber with Evans and Partners. Please go ahead. Hi, guys. My question just I agree the online business in off premise very strong and in particular You mentioned outside of New South Wales and Victoria penetration was strong in the non lockdown states. I know it's a sales result, but can you give us any sort of broad commentary around Store versus online profitability. I mean, there's a whole spectrum from supermarkets where it is different Through to and lower for online, through to apparel, for example, where it's more profitable online. So just Maybe any general comments you could mention in terms of where profitability sits for the online off premise liquor business? Thanks, Phil. Appreciate the question. Yes, look it is still true that online profitability lags The profitability that we generate from customers who come to our stores serve themselves from the shelves and then take it away themselves. But As I said at the full year, it is an area where we've put an enormous amount of focus and emphasis on understanding each element of the value chain and then working through how We can reengineer the costs and recovery of costs in those areas and also improve our processes so that we can reduce the amount of time it takes to pick an order. We can route orders to carriers that are going to provide the most efficient and effective experience for our customers. So It is a big part of the business today that is optimizing the ability to provide customers with that level of convenience. But It is true that it continues to be at a lesser overall profit margin to the Traditional come in and pick it off the shelf. Having said that, we continue to merchandise if you like in the digital space in a way that Provides customers with more choice when it comes to premium product and as I touched on before, we are really seeing a consumer trend towards that indulgence and immediacy. But it's still even in that context challenging for us and we'll continue to work on it. We've got more work to do there. Thank you. Your next question comes from Brian Raymond with JPMorgan. Please go ahead. Good afternoon. Just on back on the hotel business, just interested in your investments you've been making on the gaming machine front. How the average age has changed over the quarter, maybe year on year? And then are you seeing the ROI on that investment Through the dollars going through the machines, given on reopening, you've obviously seen all of the Hotel recovered pretty well. I would have thought gaming would have probably outperformed a bit given what you're doing on the investment side. So yes, just interested in any comments around that. Thanks. Thanks, Brian. Appreciate that. Yes, look, we've been working on bringing that average age down and throughout the last 12 months probably come down in the vicinity of 12 months, the average age. So closer to 7 than perhaps what it was a year ago. So That's been good. I think what's been an interesting learning for us is that it's not just about the machines themselves and There is a variety of factors that need to be taken into account when you are improving your business if you like which is what we seek to do in hotels and Probably the Sunnybank Hotel in Brisbane is a good example of where we're able to create a whole new experience in the gaming room, but we also Invested a lot in the adjacent sports bar and that goes to the whole customer experience people are looking for now. We also added a material number of new machines into that environment. So it's not just the one thing, it's a combination of all. We've also continued to set up our gaming rooms as COVID safe I. E. Spacing the machines out and providing Customers with a safe playing environment and that continued through the quarter as well. What I guess is also been interesting is that The number of the new machines that we've got are over indexing in terms of performance and that's really encouraging because one of my reservations as we Increased our investment in the EGM fleet was we might pick machines that were less popular with customers than the press the ones we had previously. But I think a credit to the manufacturers that we're working with, we've got an increase in trading performance out of those machines ahead of the rest of the fleet. And In round numbers you've got perhaps low teens of new machines, but they're operating at high teens in terms of contribution The total turnover in gaming. So that's given us a degree of encouragement. And as I say, it's a credit to the operators, probably First amongst them to be honest aristocrat whose offers continue to resonate with our players. Thank you. Your next question comes from Richard Barwick with CLSA. Please go ahead. Okay. Thank you. Just following on from exactly that topic, when you're talking about the number of refurbs that you're doing Within the pubs, how should we think about that in the context of upgrading the gaming fleet? So there are 2 distinct things, but presumably as you sort of gave the Surname Banking example, if you are upgrading a whole bunch of machines, Then do we are you classifying the rework of the gaming room as a refurb as well? Is that often is that the catalyst Refurbing the whole pub, just how does the 2 work together, if at all? Thanks, Richard. Look, They all are interconnected, I suppose. And we always face this challenge of aggregating and disaggregating our efforts. It's even true across hotels and retail, which, of course, Support one another often on the same pattern. That's true for Stoneybank where we've got both a renewed BWS drive through, which is trading well and a Dan Murphy's, which we're about Performer renewal on alongside a great pub with actually I think at the moment often Brisbane's most popular Gaming room and adjacent sports bar. So it's always in the combination and we try and Apply a very forensic approach to understanding what has driven those outcomes, but we know it's often in the mix. Having said that, we will go Into a particular venue and only change machines, for example. And we might also go into another venue and only upgrade the environment And not change the machine. So there's a lot of light and shade in the approach that's taken. But I think the important thing to know is that Increasingly, we're applying a very forensic financial lens and commercial lens to what sort of outcomes we're getting in pursuit of Trying to improve what we're going to do next, if you like. Thank Your next question is a follow-up question from Michael Simotis with Jefferies. Please go ahead. Thanks for taking another one. And look, I know it's a sales call and I appreciate that. You guys obviously had a fairly substantial announcement a couple of weeks ago with the change in management that's Impending for the hotels business, is there any more commentary you can make around that given The Matheson's have been obviously involved in the hotels business for a long period of time, still have an equity stake. Just anything more you could add would be helpful. Thank you. Yes. Thanks, Michael. Happy to talk to it. I'm personally and I know that the whole organization is very grateful for Bruce's Path and ongoing contribution junior that is to the business. It's a heavy burden running a hotel's business The scale of Endeavor Group's in ALH and he has done it with absolute commitment for a long period of time It is truly a 7 day a week proposition. Now he's been able to do that because he's so passionate about it and I think that's an enormous credit And he has certainly worked his way all the way from being an air conditioning engineer to being the Managing Director of the group. So it's an enormous credit to his humility and modesty I think as an individual and a leader. And we We'll continue to benefit from input from the Matson family and that is hugely valuable for us given their experience And understanding of how the hotel industry and in particular our hotel network operates. So we're very pleased to have senior As a director, we're very pleased to have the Matheson family as investors because they do add a lot of value. But It's also fair and reasonable for Junior to at this stage of his life take a break from what is a very a really challenging job. 1 that As I say, he's very passionate about, but I think a fair step for him to take a break. So I'm very appreciative Of the efforts that he's given us and I'm also very appreciative of the ongoing relationship that we'll have. Thank you. Your next question is a follow-up question. It comes from Sean Cousins with UBS. Please go ahead. Great. Thanks. Just a question, sorry, back on the labor availability. You called out 457 visas there. Are there issues around The absence of tourists as well that work in your pubs and then particularly we're getting some feedback from retailers that access to labor is a little tricky, Particularly in regional areas where vaccination rates of staff are less and you called out the efforts the company is trying to do to Are you seeing an absence of tourists and then also different vaccination rates Among your staff impacting the broader labor availability issues that you're facing please? Thanks, Sean. Yes, well, I guess it goes without saying that there is a lack of tourists that are available to work in the business and this is True for our industry as it is many others and fruit growing etcetera. So that is a clear challenge. In terms of vaccination question, you're right. It has been a slower rate of uptake in regional areas. And we actually think At least in our experience that's relative to the access to the vaccine or was it a point that everything has changed and has changed very quickly. But We certainly had some regional areas where the uptake had lagged some of the metro areas, but that's also pretty well being caught up as well. And in fact, Despite some concerns we had, there has been a real further Inside the Endeavor Group to get vaccinated and get back to work and we saw that play out in the Victorian example last week. So On balance, we've come out of that challenge relatively well, I would say, although we did have moments of concern in regional areas, but then they're long now past. Your next question is another follow-up. It comes from Brian Raymond with JPMorgan. Please go ahead. Thanks for taking the follow-up. Just on those global supply chain issues you addressed earlier, just interested how that how you expect that to play out through Inflation over the next 12 months, but also what sort of availability issues you're seeing at the moment? Like is it impacting a material amount of your In terms of out of stocks and inability to get product and do you think it's impacting sales? Thanks. Thanks, Brian. Happy to take a follow-up. Yes, I mean, inevitably there will be some relatively minor impacts on sales due to There's just no two ways about it because as much as I'd like to think that everybody will switch into an alternative product that's not entirely true. So Retail 101 is make sure you've got the stock to sell and whenever we don't we know we face challenges. And we've had In honesty, some challenges with our domestic supply chain as a result of COVID impacts in DCs and everybody's working very hard to catch We're making good progress there, but you will see in all of our stores some gaps as a result of that. We were Last week about a day behind and we're closing that gap down in terms of supply availability. So as being a day behind makes your store feel like it's Had a big day's trade if you like. It's not empty, but you do have some gaps in the store. And then in terms of the international question, I think the thing to bear in mind is that generally speaking our products are relatively high unit values when compared to for example food and I happen to be talking to a bread importer Recently who said that given the percentage share of the COGS that is attributable to the shipping cost that they had a much bigger Exposure to these challenges and perhaps somebody that was importing, for example, French champagne, which is selling for $50 up a bottle compared to perhaps $0.50 a red roll if you like. So the relative impact on an item level is probably going to be less. Nonetheless, there is likely to be some impact. Thank you. There are no further questions at this time. I'll now hand back to Mr. Donohue for closing remarks. Thank you all for joining this update. We do appreciate the interest in Endeavor Group. And as I said, We're feeling really pleased to actually be able to open our hotels again and serve everybody in this really important trading period for us, Particularly in Victoria where our team has really suffered quite extensive delays. So thank you for your That does conclude our conference for today. Thank you for participating. You may now disconnect.