Trading Update

Jul 18, 2019

Earnings release

Good morning, ladies and gentlemen, and thank you for standing by. Welcome to today's ASOS Training Update Conference Call. At this time, all participants are in a listen only mode. There will be a presentation followed by a question and answer session. I must advise you that this conference is being recorded today, Thursday 18th July 2019. I would now like to hand the conference over to your speaker today, Nick Wheaton. Please go ahead, sir. Thank you, operator. Good morning, everybody, and thank you for dialing in today on relatively short notice. I'm joined today with Alison and our new CFO, Matt, who will be adding to the presentation as we go through. Right. First of all, as you're aware, we're currently working through a major overhaul of our warehouse and tech capabilities. This transformational change was to enable us to access significant future global growth and future efficiencies. We did have ambitious plans for running this change and it's been a lot bumpier and take a lot longer than we initially planned. Specifically, automation in the Eurohub and building out our branded stock pool in the U. S. Is the issue we are currently wrestling with. These issues have restricted product choice and availability of our customers in the U. S. And Europe, which have a corresponding impact on sales growth in these regions as well as profitability in the form of higher transitional costs to fix the issue. I'm going to walk you through some of the operational challenges now so you can get a handle for where we're at. So Europe, first of all, starting with Europe, Eurohub Automation. The main issues we've had have been with the operation of the automated storage retrieval system or as we refer to it as the OSR. On go live, it initially ramps up very well. But it didn't handle the inbound put away at the scale we required, which resulted in an inbound backlog, simply meaning customers weren't able to shop our weakness. We have a similar issue with the return process in the ASR, which to help alleviate this, we did direct some of our European return centers to Barnsley, which really restricted available product. The impact clearly fell the hardest in the German and French market where in Germany there's an underlying and high returns rate, which is normally the newer product. So subsequently on outbound, again, this initially ramps up well. We've had some issues with the product labeling, which is the PIC algorithms, essentially meaning orders arriving at the PIC bench incomplete and needs to be canceled, and we weren't getting the operational efficiencies that we expected. As a result of these issues, trading stock was actually negative in Europe during the period. And if I gave you the availability stat, it's around 2 percentage points less product availability for the European customers. And we saw a much higher proportion of stock not available to be picked and therefore, not to be available to be fulfilled or seen by the customers. You can see by the impact of the restricted stock quite clearly the difference between visits. Within Europe, visits were up 19% with order growth only up 11%. We can see further evidence of how restricted the stock availability from Eurohub has been where Spain and Netherlands where we pointed these two territories to Barnsley to help ease the pressure on the ramp up, both materially outperformed the rest of Europe during June. And then our plans for landing the automation ambitious, and we did go in with a degree of confidence given we've successfully funded on many warehouses before and embedded strong but the magnitude of the impact was ahead of our expectations, both in terms of the scale of the sales disruption and the complexity of the issues we faced and hence time taken through unpick and resolve. We now expect to have embedded the automation, the tech change by the end of September. To give you, we're making progress week by week and we're seeing encouraging spikes every time a demand conversion every time we make progress. To give you a sense, the inbound issues have been resolved. We're very close to resolving the returns processes and pointing things back to the year ahead. And we are now working hard on unlocking the rest of the stock and improving the outbound and therefore operation efficiency. Turning to the U. S. Our operational tech footprint is stable and has been stable now for most of the quarter. But we're focused on building out our product offer for the U. S. Customer and building out the right width of stock in the Atlanta has been the key issue, particularly with 3rd party brands, which has been a much slower process than we had originally thought as some of these brands have not shipped directly into the U. S. Before. I'll run through some of the specifics. It's worth pointing out at this point the problem is with 3rd party branded stock, particularly at the higher price points. And hence, we've seen the impact on the ASP and therefore, the average basket within that period. Order growth was actually ahead of the level implied by the sales growth. In terms of specifics, we found brands who haven't previously delivered to the U. S, as I said before, have been slow with some of their U. S. Specific compliance issues, ranging from country of origin tags in their products, documentation and 2 individual requirements, which are new for many of our partners, Prop 65, which is chemical composition and manufacturer or factory type. We are making good progress on building out the stock pool, but it's going to be more gradual than we thought. We expect to be around 80% of the bonds we booked by the autumn from the low point of around 50%. To give you a quantification of how we've done with ASOS product where we've not had the same issues because we were better prepared with all of that, ASOS branded sales throughout the quarter were up 26% in the U. S. And increasing throughout that period, which really does demonstrate the impact of the stock and the stock pull and how well we've actually our brand is our ASOS brand is actually resonating in the U. S. Looking at the U. K. And Rest of World. These have been fulfilled by Barnsley. And you can so there's been some small impacts, but you can see U. K. And Rest of World have been much stronger, and that's been led by ASOS Design sales. Sales growth in the quarter of U. K. Was plus 16%. Of course, you don't need me to tell you that's been a challenging couple of months in the U. K. Market. It does demonstrate how our brand is still resonating and demand is less of a problem and it's more of the and we've been improving our demand characteristics throughout the period. Moving on to demand generation. In terms of the dry business trajectory, business and customer acquisition are both which are very great indicators of momentum and how we resonate with our target customers, are moving strongly in the right direction. And this has given me confidence that we've corrected the brand related issues we talked about some months ago. I've seen specific improvements in our social media, velocity and engagement, our product presentation, our product newness, all driving stronger customer position during the quarter. You can see this within business growth. Business growth in period 3 were up 16% and on an improving trajectory throughout the period, exiting in a strong place. We ended June with 20,000,000 active customers and new customer acquisition is recovering, having been marginally negative in P1. The active customer growth was solid in the period and particularly in the younger demographic, and we continue to have a reducing churn rate in the period from our existing customer base. Turning to product. We called our ASOS design specifically in the first half as growth is only 5%. This was disappointing. It wasn't it was still early days, but the growth has stepped on in the period and the exit rate was double digit for the group and much stronger outside of the EU. This was despite availability. This was, of course, the headwinds in the EU. If you look at the U. K, the best reason how well the ASOS design is resonating with our customers right now, the mix shift in the quarter was 3% from period during period 1, which is really encouraging. And ASOS Design sales have grown faster than the territory performance of 16%. Moving on to future capability. I want to give you a bit more detail about the organizational changes we've been making. You may have read we're in the process of reorganizing certain areas of our business to ensure they're structured appropriately and set up for our future growth ambitions. This entails strengthening our leadership teams to ensure we have the right roles and skills in place, which is appropriate for the global and increasingly global scale and complex of our business and to deliver the benefits of the massive infrastructure program we've been undertaking. This will involve a number of new roles, created at the top of the organization, which will sit alongside the CFO, myself, the CIO and the COO. We've also taken some action in streamlining other functions to improve the efficiency. So to conclude, I'll hand over to Matt who will review some of the numbers in detail. We're confident our performance in the period reflects temporary operational problems due to the execution of the significant infrastructure change we'll be going forward we've been going through, sorry. You also see the other stats I've walked through is the underlying trajectory in demand generation and readiness with our customers is improving. I'm confident of making meaningful progress week by week, both in the Europe operation issues and U. S. In building out our stock pool. Thank you very much, and we expect more of that to come into the future. I would now like to hand over to Matt now to talk to you about the financials. Thanks, Nick, and good morning, everybody. I'm going to look to give you a bit more detail on the numbers and specifically walk you through our revised expectations given we expect the warehouse transition issues that Nick has been speaking about to impact the remainder of the financial year. Overall, we now see sales guidance for the full year being broadly in line with the performance year to date and our PBT for the year being £30,000,000 £35,000,000 Let me now try and explain the drivers of that impact. The impact is in the order of €20,000,000 to €25,000,000 against our previous guidance, all of which is in the remainder of the year. The big drivers are disruption costs as we move beyond the planned transition period for year over year, the continuation of missed sales associated with the restricted stock availability that Nick has been speaking about and some incremental markdown to stop that has ended up in the wrong place as a result of the transition or is not sold through as we initially planned. And finally, in addition to these impacts, there is the incremental €3,500,000 of restructuring costs, which we have announced today. In terms of splitting this by warehouse, approximately $15,000,000 of the impact relates to the Eurohub and circa $4,000,000 to the challenges in the U. S. Whilst our revised guidance reflects the impact on the rest of the year, we have already absorbed a number of impacts, but these have been offset by plant contingency and cost savings across our business. Overall, for the full year, we are now expecting incremental transition of €12,000,000 versus our previous expectations in addition to the €3,500,000 of restructuring costs. In terms of the more detailed moving parts within this year, we now expect gross margin to be circa 2 50 basis points negative year on year. The movement in this guidance from the previous 150 basis points is also largely a result of the operational challenges we have spoken about with adverse territory mix and incremental markdown costs, as I mentioned earlier. We have also seen some impact in support of the customer engagement activity that Nick has just been speaking about. Our net debt at year end will be circa GBP 100,000,000 driven by the flow through from earnings, expected capital creditor movements and working capital moves associated with the impact of such lower sales, where we incur the impact of these immediately on cash receipts, but paying the associated costs typically 45 to 60 days later. So to wrap up, execution of our logistics program has been challenging and this has led us reduce our expectations accordingly as I have just outlined. We are clear on the root causes and are moving decisively to address them. As Nick has said, we now expect to complete automation of the Eurohub by the end of September with gradual build to full targeted stock rep in the U. S. By the end of the autumn. While seed issues are short term in nature, we do expect it may take some time to regain and reactivate any impacted customers. And we'll provide a further update on our full year results in October. I'll now hand back to Nick to wrap up and move into Q and A. Okay. Thank you, Matt. I'd just like to summarize with a couple of points. We've made clear progress in reactivating customer engagement and demand as evidenced by improving traffic, improving product velocity and improving ASOS Design sales. The major overhaul of our infrastructure has been bumpier and taking a lot longer than we'd originally anticipated. We're in a position where we're clear on the root cause, and we're solving these issues quickly and expect to have them done by September, as Mats just mentioned. None of these changes change the opportunity ahead for us, which remains huge. The transformational change we undertook was all about accessing that future growth, moving from U. K. Centric to global centric and capturing that availability. So I'm clear this is not a demand issue. Demand is improving throughout the quarter. We're clear that we've identified the next level of problems, and we have a road map to fix it. We acknowledge that this is a failure in execution or planning around that execution and the operational changes. The senior team are working hard on it in terms of operations and we're augmenting our senior leadership team to capture the future benefits coming. We have taken the right action in terms of removing and streamlining and taking some fat out of our business where we thought it was there. The organization, ironically, will be much cleaner and much fitter with a much greater level of capability by the end of this period. And at the same time, I'm delighted that ASOS Design brand is improving rapidly, which will give future benefits for our organization. Okay, I'd like to hand over to the Q and A now. Thank you. Your first question comes from Anne Critlow from Societe Generale. Please go ahead. Thanks. Good morning, Nick. Good morning, Alison. Could I ask please what the retail gross margin did in 3P? And why the entire transition costs seem to go through the gross margin downgrade and not through operating cost of sales, where there actually seem to be some savings? Right. So what we've guided for the full year is that retail gross margin will be down to 2 100 basis points from where we were previously at 1 sorry, 250,000,000 from where we were previously at 150. What we've done within that is we've continued to invest in price, doing the right thing for the customer and the brand. And we've also had a very good look at any potential terminal stock issues, largely in relation to the U. S. And taking some actions to ensure we don't carry any terminal stock into the next period. What we've also done as a matter of course is we've continued to invest in all the right things in terms of marketing, in terms of brand engagement to keep on building customer acquisition. Okay. But I'm still struggling to understand why there seem to be some savings in your cost of sales ratios, where I would have expected perhaps warehousing costs to go backwards in the transition costs. Transition cost in warehousing has gone backwards. It's for the period, it will be €47,000,000 versus €35,000,000 And so it's a €12,000,000 incremental transition costs fixing the remaining issues and the delayed efficiencies coming through in the operation. I think as we also mentioned in the statement, there are a number of cost savings across the business, a number of overall impacts under the lines you're describing. So I think you can't necessarily disaggregate the transition costs from all of the other moving parts within our cost base. But just to be clear, Anne, yes, the transition costs, that is not corresponding. The transition costs, the incremental ones we're calling out, that doesn't correspond to the change in gross margin guidance. There are 2 separate issues. So I can pick that up with you afterwards and I'll walk you through. But I think you might have just put one number into another there. Okay, great. Thank you. Thanks, Sam. Thank you. And your next question comes from the line of Charlie Muir Sands from Exane BNP Paribas. Yes, good morning guys. Thanks for taking my questions. I'm trying to actually more about next year and understanding how much of this year is just going to stay within this year. So firstly, I wondered if you could give us an indication as to how much you think transition costs will drop by next year and whether there's still some next year that then drop in the year thereafter? Secondly, how much you expect to save from the €3,500,000 of restructuring costs? And thirdly, are you still committing to rebuild to that 4% at EBIT margin? And if so, by when? And then finally, do you still anticipate spending €150,000,000 on CapEx next year? Thank you. So that is maybe, Steph, if I let Matt answer some very specifics. Charlie, so Matt, shall we go first? First? Yes. I think, I mean, Charlie, I can understand the interest, but I think it's appropriate to pull you back to the statement and the fact that we'll give an update at the full year results. I think to comment on the specifics, it's just too early for us to do that in a meaningful way. In terms of the land point, we are committed and haven't changed at all to rebuilding our margin. So that's one of our key focus points. So 4%, but you won't say by when? Not this morning. All right. Thank you very much. Thanks, Charlie. Thank you. Your next question comes from the line of Simon Irwin, Credit Suisse. Please go ahead. Good morning, all. A couple of questions for me. Firstly, just on the you talked about strengthening the leadership team. How far advanced are you? And how much visibility are we going to get on this? Because at the moment, one's kind of vision of ASOS, I'm afraid, doesn't get much lower than the C suite. So are we going to get kind of names and positions and a bit more confidence in that you do have the bench strength across the board and when these people are going to be in place? Yes. So on the long list stage with most and some are in short list stage. And when it's appropriate, of course, I'll share the names and positions of what they're doing, Simon. But I'm certainly not there yet. Okay. But realistically then, these people aren't going to be in place for another 6 months plus? Well, it's probably 6 months is the would be the right expectation. Okay. And is there any scenario you can currently envisage which would require you to raise more equity? Well, you have noticed we have improved and increased our RCF and that's just sensible financial management to take those questions off the table. If there was something that we saw that we thought would augment our growth, then that might be something that requires an equity raise. Not suggesting that any minute that that's in our plans or we've got the case at all, but that would be a scenario in the spirit of the question you're asking. Okay. And just one final one. Can you just give us the gross margin for the U. K. Business on a stand alone basis in P3? No, we don't give that out. We'll give you more clarity in the full year results. Right. Okay. Thank you. Thank you. Your next question comes from the line of Tushar Jain, Goldman Sachs. Please go ahead. Yes. Hi, good morning, everyone. A couple of questions. Is it possible for you to break down how many brands in the U. S. You face that specific compliance issues which led to the delay or sort of what's their contribution to the sales is? That's my first question. The second, in terms of the IT system, especially around automation and warehouse, is that the way to look at it is just one off or you will need to require more investments in your IT systems that was sort of an issue a couple of years back? And my final question, just trying to clarify, I think throughout the prepared remarks, you said that you're seeing the demand increasing. But then you're also seeing that in the outlook statement that it will take some time to regain the demand. So I'm just wondering what is the delta there? Is it the new customer are coming back, but you need to reignite your older customer, if you can give a little more color on that? Thank you. Okay. So I'm not going to give you the number of the U. S. Brands. But if I give you this sort of proportion, U. S. Is largely a width issue. If Barclays is 100% width, the width in front of customers for our total offer right now is 50%. ASOS Design is around 73%. So the width is building more gradually than we are slower than we thought with 3rd party brands. Some third party brands, we are just not going to be trading in the U. S. Those are more European ones because the compliance for the things I said earlier is too great for them. So we're expecting to get around 80% with versus Barnsley by October. So that's that case. I'm probably going to be specific on the automation, Tushar. Can you just ask me that one again in a second? Just in terms of you highlighted that you had some challenges in the interaction between your automation warehouse and your warehouse software management system. I'm just wondering, is it because of the systems are old? Or it's just some technical issue that could be resolved without having a huge investment in IT? Okay. There's 2 aspects to the software. 1 is the warehouse control system and the other is the warehouse management system, both are third party pieces of software. The warehouse control system controls the interaction between the mechanization, automation and people's operations. That's had some challenges, particularly in the OSR as I outlined. The warehouse management system has also had some issues, both third party software related issues with 3rd party vendor software. We didn't expect that level of software issues when we started off, but we are working through them and knocking the issues off quickly. But to be clear, for the rest of the year and into September, we've expected no improvement in the operational efficiency while we work through those issues with our supplier. Got it. And my final question just in terms of demand. What was that? Sorry, that was No, no. Obviously, some customers have been impacted by the stock availability issues. And I guess all we're trying to recognize is that some of those may have not had the perfect experience and therefore we might need to react to specifically impacted customers. Well, look, my script, we talked about canceled orders. So during the last quarter, the ASOS experience for largely our European customers has not been as good as it once was and will be. So those are the things we are being cautious about. Got it. All right. Thank you very much. Thank you. And your next question comes from the line of Simon Bhalla from Numis. Please go ahead. Hi, Simon. Good morning. Three kind of quick questions from myself, if that's okay. Firstly, you kind of mentioned kind of satisfaction with the headroom to your RCF. But I wonder if you can give a little bit more color in terms of whereabouts you're expecting peak drawdown to get to over the year ahead to give us further comfort on that. Secondly, I don't know if you can talk any more specifically around the timing of some of those issues, particularly in the Eurohub warehouse becoming apparent and building. It sounds like it was an issue to do the ramp up phase as you went through the period. And then finally, is there anything further you can give in terms of confidence or color around whether this will impact your kind of buildup to peak trading? It sounds like the issues are hoped to be resolved around kind of autumn time, but I guess that is putting it somewhat close to kind of build up ahead of Christmas peak. Okay. I'll do the task too, and I'll leave Matt who gave a detailed explanation on some of the numbers and then come back to the headwind point. Right. So the second one on timing. This was an 8 week ramp up and started early May. It initially went from 0 to 1,000,000 units of output within a period of 2 weeks, which was much greater than we thought. And to give you a reference, it took something like 13 months for Barnsley to get the same level of output. So it went very well from a low base. We stuck around that level for a period longer than we thought. Then the volumes went backwards slightly and it broke through to another level in terms of inbound and outbound. But we've had moments where it's been far stronger and we've had moments where we've not broken through in a consistent way. So the stability of the underlying code has affected some of those timing during the 8 week period. So that's what we went through in terms of the ramp up and scale up. What we're effectively saying, an 8 week ramp up will be more like 16 weeks building into September. What it means in terms of impacting peak, we're expecting to have all these results the product to be building up into September and we start moving towards our peak trading period in October, November. And remind you what I just said earlier in my overview, we're expecting U. S. Random stock to hit the 8% level by October anyway. So just I guess to your question with respect to the RPS, I mean, it will probably be more than me to comment on specific levels within that. But our strong expectation would be that we would be we would have a significant amount of head headroom under the RCF based on our current plans for the future with respect to the capital guidance that we previously commented on, etcetera. So I think you can see the RTF is purely to give us appropriate balance sheet flexibility. And approach that has been prudent with respect to net debt, which remains effectively around 1x as projected for the end of this year. Thank you. And your next question comes from the line of Paul Bonnet, Bank of America. Please go ahead. Hey, thank you so much for taking my question. My question is on the business. You used to have a free cash flow guidance for free cash flow for next year. I just wanted to know if it still holds? Sorry, was that free cash flow for next year? Yes, because you have a positive free cash flow guidance for next year. I just wanted to know if it did hold. I feel like I'm going to repeat myself, but we're obviously not giving F 'twenty guidance at this stage, and we'll give a fuller update at the full year results. I think the only thing I could say is that the issues are short term in nature, and I'll point you back to the statement with reference to that. Okay. Then perfect, perfect. And maybe one more question. Can you comment maybe on the retail gross marketing by region a little bit if possible? No, Paul. We'll do that in more detail in the full year results. Okay. Thank you so much. Thank you. And your next question comes from the line of Jon Stevenson, Peel Hunt. Please go ahead. Good morning, guys. Good morning, Jon. Good morning, Jon. Good morning, Jon. First of all, you talked about the customer metrics and some of the return rates in I guess you hit them with price rise at the back end of last year. And now obviously, we've got an availability issue. So what are you seeing in terms of the customer sort of performing effectively? Are people turning away? And what are you going to have to do about that? 2nd, on the U. S, can you just update Sorry, stop there, John. I'll stop there. You will see in Europe, and I said it earlier, that visits increase in Europe is up 19% during the quarter on an increasing trend. Okay. And what about churn? Say that again. You know we don't give churn out, but I also gave some color that we are reactivating customers faster than we were at the H1 and reducing churn of existing customers during that period. But I also acknowledge that some of our European customers will not have had anything like the service they should expect from us and it will be better. Okay. Okay, perfect. And moving on to U. S. In terms of next day capability, can you just give us an update in terms of where you are? And also for both U. S. And Europe, whether what's been going on has impacted your marketing plans, whether that's been some social or just in general in terms of backing the launch of the U. S. And later cut off in Europe? So we launched next day delivery competitions in some major East Coast cities and 4 West Coast cities within the last 4 weeks as we said we would, slightly later than we originally thought. But so we've launched those with customers, and we're happy with the early reactions on them. I'm not going to give any more details on that. But apart from at the time, we said we'd do it. We know that's the first for ASOS and the first for ASOS customers. And they're the big East Coast and the big West Coast cities. And I'm confident that will be another differentiator for the ASOS brand in the U. S. In territories. We're getting good activations with existing customers, particularly the younger demographic, which we were struggling with in the first half. And we have no intention of not continuing to acquire those customers wherever they may be. Okay. Let me just make actually while I'm on just a final question just in terms of stock levels in Europe. What's it looking like at that moment? And are you able to actually clear? Right. So I said during the quarter, some of the stock levels available on trading stock were negative. Still the case but improving. And your next question comes from the line of Wayne Brown from Liberum. Please go ahead. Good morning, Hi, Wayne. Hey, how are you doing? Good. Good. Just a couple of questions on inventory. I think you've been speaking about trading inventory. And whilst I'd love to hear numbers, if you can't give the numbers, if you can maybe just speak qualitatively of where your inventory levels or your total inventory levels are at the moment versus where you plan them to be ahead of peak this year? And then also qualitatively, what is your strategy around Brexit around the 31st October? Should we be expecting a bigger peak and a hump as we're going into peak trading? And I'd like to put that into context of where we are right now. All right. I'm not going to give you any numbers on the inventory levels. You know that. Clearly, we've been suffering with trading availability and availability in front of customers, particularly in Europe, as I said earlier, and in Wizz in the U. S. In 3rd party brands. Wizz in the U. S, we're expecting to reach the 80% versus Barnsley by October. And the overall inventory levels in the business are under control. However, more in the U. S. Than we wanted, what we've taken is an extra mark down activity to cover that. So we don't take any inventory that we don't want into the autumn winter season. So for example, what I mean by that is the product is designed for 8 weeks selling period and it's due in June and it's now arrived in July, it's lost 4 weeks of its potential selling ability. So what we've done within the guidance is taken the appropriate action to mark that down to make sure the seasonal elements are cleared within the most seasonally relevant period. That's called markdown to ensure we are not carrying over any inventory into spring summer that we're not into autumn winter we're not happy with, which is all about the retail margin guidance for the full year. Okay. And then can you also give us a timetable of what the practical applications are that's going to be able to give you the confidence to clear that stock. So clearly, you've had these technical issues, but practically what's going to happen between now October that gives you the confidence that you'll be able to clear the previous season stocks so that the inbound stuff won't necessarily get caught up in the clog in the entry point into the system? Okay. So the previous season starts with currently this season. It's constantly known as a markdown and to make sure to reset your inventory levels. That's what's happening right now. Okay. And one last question then. With regards to I'll just get your view as to why €350,000,000 is the right number for the RCF? And to what degree was there pressure from your credit insurance to get that size of an RCF? No credit insurance pressure whatsoever. And this was about ample headroom and making sure our people were down. Liquidity was never going to be an issue. And this is something that will roll for 5 years and give us the flexibility to change anything that comes our way if we need to without worrying about it. So if you say the worst case scenario that these problems continue for longer than what you were hoping for, maybe as we even approach peak, then your liquidity within the RCF would be absolutely fine. There's no concerns there. Absolutely right, yes. Thank you. Thanks. I think we're getting to final questions. One more. Anyone got one more or shall we close it there? We have further questions. Would you like to take one more, sir? Go for it. Your next question comes from Miriam Adisa from Morgan Stanley. Please go ahead. Hi, sorry. All of my questions have been answered. Thank you. All right. Fine. Thank you, Miriam. All right, in which case, I'll wrap it up. Just to reiterate what I said. We're confident this is less of a demand issue, and we've identified a road map of working extremely hard on fixing the operating issues. We know this has not been the best execution of some of these things, and we've taken that one accordingly. We're briefed during the senior team, as I talked a bit about. We will emerge leaner and fitter with a much better operating P and L when we complete all these things. And I'm happy with the uptick in our customer engagement and the reactivation, particularly through ASOS Design. All right, guys. I will Matt and I will speak to you soon. We'll be around for the rest of the day if you want to follow-up with any points as will ISMB. Thank you. Thank you. That does conclude our conference for today. Thank you for participating. You may all disconnect.