Good afternoon, everyone. Thank you for joining Wilcon Depot's third quarter and nine months 2023 earnings call. Joining us today are Ms. Lorraine Belo-Cincochan, President and CEO, and Ms. Rosemarie Bosch-Ong, SEVP and COO. As per usual, Ms. Lorraine will give a short presentation, after which we will open the call for questions. During the Q&A portion, you may click the raise hand function or type up your questions in the chat box. I'll now turn you over to Lorraine.
Thank you, Jean. Good afternoon, everyone. Thank you for joining us today for our nine months and third quarter 2023 earnings conference call. I'll start my presentation with our third quarter performance. As a summary of our third quarter results, our net sales totaled PHP 8.79 billion, growth was flattish at 0.1% year-on-year, PHP 908 million net income after tax, gross profit margin rate at 39.6%, EBITDA margin at 17.6%, and EBIT margin at 13.8%. Slowdown in foot traffic and transaction count in old stores drove company-wide comparable sales or same-store sales growth to decline 5.7% year-on-year. Comparable transaction count dropped by 7.5%, while comparable ticket size still grew by 2%. Product categories that grew above the average growth were paints and building materials. Two Depot stores were opened during the quarter, one in Luzon and one in Mindanao.
For the total sales breakdown for the third quarter, the Depot format stores comprised majority of net sales, contributing 95.4% with sales of PHP 8.385 billion. The Home Essentials format increasing to 2.2% contribution, with sales of PHP 199 million, and project sales, PHP 208 million, increasing 2.4% of the total net sales. The Depot's contribution to total net sales decreased as its year-on-year growth slid by 1.5%, while the Essentials grew by 13.3%, and project sales jumped 126.9%. The increase in the smaller format sales was due primarily to the two pilot DIW they opened in July 2022 and April this year. As mentioned earlier, the product categories that grew higher than company-wide average for the quarter were paints and building materials. Comparable sales declined by 5.7% year-on-year due to slowdown in foot traffic in all regions. The Depot's comparable sales dipped by 7.1%.
The Home Essentials likewise declined by 4.4%, while project sales, as earlier mentioned, rose 126.9%. Comparable transaction count dropped 7.5%, while comparable ticket size still grew by 2%. Gross profit slightly increased by 0.5% or PHP 18 million in the third quarter to settle at PHP 3.477 billion, attributed mainly to the expansion in gross profit margin rate from 39.4% to 39.6%. In-house and exclusive brands continue to improve their profitability, pushing a blended margin despite its contribution remaining at 51% for the third quarter for both years 2022 and 2023. Operating expenses, including lease, related interest expense likewise grew by 10.6% or PHP 225 million year-on-year to total PHP 2.359 billion. The increase is mainly attributable to expansion related expenses.
Rent and net other income closed lower by 33.3% or PHP 46 million, totaling PHP 92 million for the quarter, due mainly to the lower collection of supplier support for marketing and promotional expenses. Income tax expense decreased by 17.3% or PHP 63 million to end at PHP 303 million, due mainly to lower taxable income. Net income for the quarter closed at PHP 908 million, down by 17.8% or PHP 196 million year-on-year. For our nine months performance results highlights, net sales for the nine months totaled PHP 25.943 billion, up 4.9% or PHP 1.220 billion year-on-year. The increase was mainly driven by the contribution of new stores as comparable sales growth declined by 2.1% for the period. Comparable ticket size expanded by 3.5%, offset by the drop in transaction count by 5.4%.
For the total net sales mix, share of in-house and exclusive brands was at 50.9%, and categories that grew above average were paints, building materials, plumbing, sanitary wares, and appliances. Six new stores were added during the nine-month period, while two bottom-dwelling smaller format branches were closed, ending the period with 87 stores. The Depot format accounted for 96.5% of net sales, the Home Essentials format at 2.1%, and the remaining 1.4% by project sales. Categories that grew higher than the 4.9% company average were paints, building materials, plumbing, sanitary wares, and appliances. For comparable sales, the Depot's comparable sales were lower by 2.8%. The Home Essentials likewise dropped by 2.2%, while projects rose 75.5% for the nine-month period. Comparable ticket size expanded by 3.5%, offset by the drop in transaction count by 5.4%.
Gross profit grew by 6.6% or PHP 631 million to total PHP 10.248 billion, driven mainly by the expansion in gross profit margin rate from 38.9% to 39.5% year-on-year. In-house and exclusive brands margin increased enough to overturn the impact of the slight drop in contribution to net sales from 51.1% to 50.9%. Contribution of our in-house and exclusive brands reached 51.8% in September. Operating expenses, including lease-related interest expenses, increased 17.6%, or PHP 1.053 billion year-on-year, to close at PHP 7.036 billion. Expansion-related expenses primarily drove the increase, particularly depreciation and amortization and manpower expenses. Eight stores were opened from the fourth quarter of last year to third quarter this year. Other income dropped 36.4%, or PHP 108 million, to close at PHP 405 million for the nine-month period, traced mainly to the rebate received from a trade supplier for a promotional activity in the first quarter.
Plus the increase in the usual rent and other income from suppliers and delivery fees from customers. As a result of the decline in comparable sales growth, coupled with the increase in operating expenses, net income for the nine months dipped to PHP 2.726 billion, lower by 7.9%, or PHP 235 million year-on-year. Operating performance for the nine months ended September 30th yielded substantial operating cash flows. However, it was offset by cash flow used in capital expenditures, lease payments, and payments of dividends. Current ratios slightly declined from 2.27 is to 1 to 2.18 is to 1. Meanwhile, the company's liabilities consist mostly of trade payables, lease liabilities recognized under IFRS 16 guidelines. Continuous investment in store network expansion, additional warehouse buildings in the main distribution center, store and transportation equipment, IT infrastructure, software renovations, resulted in a total CapEx of PHP 2.006 billion for the nine months.
Except for 2020, year-on-year sales from 2013 is increasing as we intensified our store network expansion from 2017. Operating margins have been generally expanding year on year, except that these dipped slightly for the period compared to the full year 2022 margins. In our board meeting last February 2022, our board declared dividends totaling PHP 1.5 billion, equivalent to PHP 0.37 per share, representing a 76% increase over the prior year's PHP 0.21 share. For six years in a row, that is every year since we were listed, we have given out cash dividends, even in 2020 amid the lockdown when majority of our branches were closed. We remain committed to distributing cash dividends consistently every year. To reiterate our growth strategies for our store network expansion plans, we will endeavor to open eight to ten branches this year, a majority of which will be in Luzon.
We have six stores in various stages of construction. However, because of delays, mostly due to the rains these past months, management decided not to cram the completion during the holiday late in the last two months of the year. Most likely, the other stores originally scheduled for the last quarter will spill over to next year. While we are looking at a slower sales growth than expected this year, we are encouraged by the relatively good performance of most of the stores we opened in the last two years. This is also so we can proceed with the rationalization of our smaller format, the Do It Wilcon, or DIW stores, which we did this second quarter, while staying on track to meet our 100-store target by next year. We budgeted close to PHP 4 billion in CapEx for this year. We have spent PHP 2.006 so far.
Part of this budget are for branches that will open next year, but construction has already started this year. We will continue to develop products in other categories for in-house brands to increase their contribution and to diversify further our product portfolio. We continuously improve our physical and online store layout and features and other customer experience enhancements, and continued marketing efforts to further strengthen and increase brand awareness and visibility. Thank you, and I shall turn you over back to Jean for our Q&A.
Thank you, Lorraine. The call is now open for your questions. Who would want to start? Yes, Theresa.
Hi, good afternoon. Thanks for the call. I have a few questions. First, what led to the year-on-year GPM expansion in the third quarter? I recall in the second quarter, it was driven by lower inventory and shipping costs. Was it the same in the third quarter, or were there other factors driving the improvement?
It is most likely a factor of the Metro Manila stores who have the lowest gross profit margin. The contribution has dropped this third quarter versus, say, Central and Northern Luzon, where we opened the most number of stores this year. At the same time also, South Luzon, the Calabarzon area, the contribution also dropped by 1 percentage point. Metro Manila dropped by around 2 percentage points and was replaced by the increase in the contribution of the North Luzon stores and the Visayas stores. Whereby, pricing-wise, we would have also higher prices because of the logistics cost that we tuck into the selling price.
Thanks, Jean. In terms of operating margins, as a follow-up to that. Operating margin, what is the difference between the EBIT margin of the stores in Metro Manila, Calabarzon, North, and Central Luzon?
Is it roughly the same because of the high-
Actually, the EBIT margins in North Luzon is higher because we already have achieved scale there, and some operating leverage. A close second would be Metro Manila. The Visayas and Mindanao regions, because of the shipping, you cross seas, which really is a more expensive way of shipping the products, still would be lower operating margins. Of course, the scale. The scale is also not present in those areas.
Thanks, Jean. My next question is on the SSSG. How is SSSG trending so far in the fourth quarter, or in October, and what is your outlook for the rest of the year?
Miss Rose or Miss Lorraine?
Well, for Metro Manila, it remains a challenge. I guess the only thing that we're banking on is that the loyalty of the customers, because Metro Manila is really. Considering that the market is soft, there's so much competition also in Metro Manila. But for other areas, like the new areas where we locate, I guess, in terms of SSSG, it will have improvement, I would say. But Metro Manila is really very tough because of stiff competition.
Where's the competition coming from in Metro Manila? Just for you.
I'm sorry.
We're competing both from the marketplaces, the brick and mortar stores. As we speak now, I'm sure you've seen the reports of the marketplaces in terms of their revenue, and these are not good indications because it's not equal level playing field. We see a lot of cross-border items coming in, especially for small hardware items.
Thanks, Miss Rose. I guess competition won't really be in the categories you're strong in, like tiles flooring.
Yeah.
When it comes to-
For our core products, yes. We're still comfortable. SSSG is because of the-- If you've seen in the report, although basket size or transaction amount has increased, foot traffic and transaction count has gone down. Especially for Metro Manila area. Luzon and the North and South Luzon remains positive.
Thank you. My last question, can you elaborate more on the improvement in project sales? Which type of developers are you seeing increased demand from?
Well, we're seeing a ramp up on their fast-tracking the developments. In fact, most of the projects that we're serving now, these were secured during the pandemic, and even now, we were able to do, I would say, snatch sales, Jean. Probably because snatch sales in terms of shifting the specification from our product to other specified products. Also, the developers now, especially hospitalities, they're fast-tracking the construction. There's this big development in, I would say north of Metro Manila. Yeah. It's also the same company. They're expanding also in Visayas and Mindanao.
Thanks, Miss Rose. That is all from me.
Thank you.
Any other questions? Anyone? Yes, Yong Hwa.
Hi. Thanks for the presentation.
Hi.
I'm curious about how easy or how difficult it is to obtain commercial plots of land in Northern Luzon. Thank you.
Well, it's quite a process to acquire property here in the Philippines. Especially since for us, we require a larger plot of land, and usually we'll be talking to several owners. It's not so easy, and at times the location may not be suitable or may not be classified as for commercial use. We'd have to convert it to commercial use from, let's say, farmland or other uses. For us to say we are starting this construction of this site, probably 6 to 12 months worth of work had to have been done, like negotiation, looking through the titles, talking to the owners, and doing background checking. It's quite complicated.
Okay, that's clear. Thank you.
Yes, Gina?
Hi. It's been a while.
Just wondering, you have your 100 store target by 2024. What happens next? Also, you're talking about Metro Manila competition increasing. Do you feel that the market is already sort of reaching saturation in terms of home improvements retail formats?
Yeah. We believe that there's still room for expansion if we expand now. We use the population as a basis. So, for every 300,000 to 350,000 people, it can cover one Depot. So, we are 100 plus million now. Even if you say that we're already 100 stores plus competition, assuming there's about 150 of them, which is majority of them are half our size in terms of gross floor area, they're not as equal as us. So, we can open still. If we have the capacity or if we have the resource, we can still open up to 100 to 150 stores now as we speak with the population that we have.
Okay. Just on, I guess what you see for fourth quarter and next year, whether you believe the situation will improve?
Well, we are hoping that the situation will improve. But, in fact, we are having our big promotion now in line with our anniversary celebration. We have this My Home Goals promo wherein we are giving back to our customers through raffles. So, we are giving away PHP 10.6 million worth of eGCs or electronic GC to our customers, just to be able to entice them and to draw more traffic in the stores.
Hopefully this period we are in, it is the Christmas season, and we are expecting a lot of Filipino, we call it balikbayan, coming back to the Philippines to visit their relatives here. So many would still do a lot of soft improvements or soft renovation in order to receive their visitors or the relatives coming from abroad.
Mm-hmm. Okay.
We are expecting that the fourth quarter will be stronger in terms of absolute amounts like sales, sequentially quarter-on-quarter. But I guess there has to be some sort of a trigger in the macro environment that would entice people to spend on high ticket items such as home improvement. But there has to be something happening, like a trigger.
for home improvement consumption to spark up, right? Something like that.
Historically, the last quarter, there's been more spending in October, November. It's usually the highest months in terms of sales. In terms of absolute amounts, we're expecting this season, like this last quarter, to have the highest again sales. Unless there's a turnaround in the macro, something big happening, it won't be enough to flip the whole year's performance.
Sure. Of course. Just one last question. On the private label/exclusive products, it's already up to, what, 51.2% now, and I know it's been higher in the past by a few basis points. Realistically, are you where you're comfortable? I guess the margin accretion we can see from further increase in this, are we all done with that?
Yeah. Actually, for September, we're almost at 52.
Mm. Yeah.
We'll see if the trend will continue upwards. But yeah, the September, I think we're 51.9 or something like that. We're almost at 52. So, we're kind of reaching the 52% mark again.
We'll see if we can still do that. It's because the tiles as a contribution to total sales actually dropped to 28%. It's an indication that there's really not much private construction going on right now. If the demand will come back, then I would suppose we will move up the contribution of our in-house brands will be on the upward trend again.
Mm-hmm. Okay. Thank you.
Just last one. J ust to add to what Rose said, we are still set on the 8 to 10 stores per year after the 100-store target is reached. That is what we are looking at now. We are still not going to set, you know, a general target like 200 or
Yeah, because we are not comfortable committing on something that we cannot exceed.
We cannot exceed. I see. Got it.
Yeah, we cannot exceed, but we are still looking at that 8 to 10 stores. As to if it is saturated, it is just really actually up to us. The home improvement market is huge, and it is very fragmented, and it is up to us, really, if we want to widen our target market in terms of product offering or segment that we would like to target. It is just that we want to focus where we are good at and here and there, we are experimenting before going full blast into something that is new to us. That is where we are at. But in terms of potential, we feel that this market still has a lot of potential for growth for us.
That's great.
Thank you.
Okay. John?
Hey, thanks, guys, and happy Friday. Actually, two questions for me. The first one being any feedback from your clients or small contractors that explains why they're not spending? Is this pricing being prohibitive, interest rates, or just we're not there yet in terms of the construction cycle? So feedback would be great.
Well, we've been getting feedback from our regular contractor customers. In fact, we have a database, so we're constantly communicating with them. Well, some of them would say that they're still waiting for the right timing when to start the project because there's still inflation. Some of them cannot, I would say, adjust the contract that they've secured with their clients, so they're still waiting for the time for the prices to settle. And some would say that it's still on the drawing board. Their clients are still anticipating that things will improve. So, it's really more on the macro. I think the perception is that they're still waiting for the stability. Just like what Jean said, if there's something that would trigger government spending, all of these things, if macro would improve. In fact, BSP even downgraded their projection for the year.
We're hoping that things would do better. As we speak now, there's a lot of challenges that we're facing here and there.
Plus the weather, it's always raining as well.
As we speak now, it's raining where we are now.
Which is actually the cause of the delays of our-
Yeah
planned 14. We were planning for 14 this year actually.
Yeah.
I guess we still could exceed 10.
But we just don't want to cram, because it's also full of holidays from here on, starting tomorrow until December.
Until November, yeah.
Yeah. Until the Christmas holiday. We are content to just finish what we could in the most cost-effective way.
Okay, thanks. Maybe a second follow-up on competition. Can you just elaborate a little bit more where this is coming from? Are these traditional hardware stores emerging from the pandemic, or are these your other competitors which have 50 to 100 stores each? That would be great. Thanks.
Actually, when the market is down, you would feel competition, but when the market is up, you do not feel them. For competition, they are always there. I have mentioned about the marketplaces. You can easily buy these small hardware items online at a very low price. But of course, some people would not compromise quality over price.
So we still stick to that target market where we are comfortable at, wherein they are really looking for quality products. So that is our USP. But again, because the softness of the market, there is a tendency for some to really cut prices. But eventually, the customer will always go back to us because they use those strategies just to lure customers, but eventually they cannot serve. As I mentioned, these projects, I mean institutional accounts. Some of them, we were able to serve through, I guess I mentioned earlier, snag sales.
Initially, they are not really looking for the brands that we carry, but because we have available stock and we are more reliable. So it is really a function of not enough opportunity for everyone. But of course, we are still very confident that with the kind of, I would say, service, products that we have, I think we still have an edge over competition.
All right. Thank you very much.
Yeah. I think based on common suppliers that we have with our competitors,
Yeah
our suppliers were telling us that we are still better off than
Well, better off.
yeah.
Yeah.
We're way better off than
There are competitors. Yes.
In fact, they're relying on us. Most of them, they're really banking on Wilcon for them to be able to reach their whatever targets they have.
Bill targets. Yeah.
Yeah.
Yeah.
Because I think that the others are really those competition I mentioned, those unfair competition happening now because of the cross-border. I am sure you know China, they would really dump their products here because they are in a deflationary period, right?
Actually, no, that is really good insight. Thank you, and happy Friday, guys.
Thank you.
Okay. Thank you.
Any more?
Yeah. I think the OPEX, it is about the logistics cost, right? It has increased. That is why
Yeah. There is a question here from Timberlyna.
Yes. We will call on Permada.
Thanks for the opportunity. Permada from UBS here. You mentioned about basically China dumping their goods into the Philippines. Do you think the government might do something about that? What's the channel of transmission when you say that? Is it mainly the marketplace like Shopee and Lazada and so forth?
Yeah.
Or increasingly like Temu is also in the Philippines these days. Can you elaborate what marketplaces precisely?
Yeah. Those you mentioned and those selling in Facebook, those selling in social media. In fact, the Internet Transaction Act is still pending now with the Senate. It has already been approved by Congress. In fact, we're one of the technical working group there, our organization. We're really pushing for the ratification of the ITA. However, I don't know what's happening. It's not the priority of the government now. But if you look at the other ASEAN countries, like for example, Indonesia, you've heard that Indonesia already banned selling in social media. They banned selling of goods in Facebook, even in TikTok. We're hoping that the Philippines will do the same action. Because it's not equal level playing, where they're not paying taxes. We're all paying taxes here. I mean, the brick-and-mortar stores, we're paying VAT, we're paying taxes, and even the municipal taxes and occupational, all of these things.
Hopefully, the government would look into this, and we're really pushing for it.
Thanks so much for the clarification. What are you pushing for? A ban or taxes?
We're pushing for the-
Import duty or-
Yeah.
Can you elaborate?
Taxes. They will be taxed similar to the brick-and-mortar.
Okay. Thank you.
Any more questions?
Yeah, maybe just to follow up on my earlier question. Have you done any internal studies in terms of what's the average price gap between your SKUs and what's available in the marketplaces currently?
On what category?
Well, just across SKUs. Do you have a range or do you know the average price gap kind of thing?
You mean market price?
You have a lot of SKUs.
For national brands, I think we follow SRP. It should be the same across. Let's say this distributor or these national brands, they would set an SRP or a suggested retail pricing. But for our own private label brands, definitely we price it on market price, in terms of like-
No. I think the question of Permada is what's the difference between our prices-
The difference
and the marketplace.
Marketplace, definitely it's not apple to apple because what they're selling is, for one, more inferior product. Ours is, for example, hardware items. They're selling disposable hardware, while we're selling branded ones that you can reuse. We're targeting really DIYers. Probably they're targeting contractors for one-time use. It's not apple to apple. There might be 10% to 15% price difference, which is quite significant. For, let's say, similar brick-and-mortars store, if it's a national brand, definitely we have the same price unless they cut price or they have promotions. What we've noticed in the market is that sometimes they would announce promotions and they will give big discounts, but eventually the customer would realize that they don't have the stock. It's just a marketing gimmick. That's what's happening in the market, maybe because the market's really down.
They're doing a lot of strategic moves.
I think also for the marketplaces, as Rose mentioned, they're very low quality, so the price is really different. Let's say ours would cost maybe PHP 1,000, but then it's heavier, it's more durable, it lasts longer. The ones that you see on Shopee, Lazada, it would be like a couple hundred, a few hundred, but the pictures really nice. That's not going to last very long, and ours is going to last long because that's our value proposition when you buy our product. That's kind of the way it's working out now. For products that you can easily just buy, that's not really something that you need a lot of. Like example, I search, I go online, I also take a look at these products, and a lot of them are really not very good quality.
That's really the way the marketplace is, and I think maybe customers are not so aware, right? They'll see the picture is really nice, and then they buy it, and then it's actually not so. It's very thin. They'll say it's stainless steel. I think there's 201 and 304.
Yeah. They'll say it's 304, but then when it arrives, it's actually not 304, right? Ours is actually 304. If we say it's 304, it's actually stainless steel, and then the product you order, it arrives, and it rusts. That's really a Wild West type of situation, especially for hardware like faucets, hardware, things like this. That's just the landscape.
Do you sense that-
Times like this, of course, you know. Sometimes-
Yeah, at times like this. Sometimes, okay, I don't mind that it rusts.
You would sacrifice quality for that.
Do you sense that, because at the beginning of the year, some of the marketplace like Shopee said they would cut incentives to focus more on profitability. But obviously now in the Philippines, Temu is there too, probably TikTok as well. Do you sense that they're still subsidizing basically the offerings a lot, or has that gone down?
They subsidize the shipping to reduce friction-
to reduce the friction of clicking order. You can buy, I don't know, a dollar, two dollars of item, and they'll ship it to you for free.
That's the subsidy that they're doing. I don't know how long they're going to do it because it's a cost. I don't know. They're burning money, I think, subsidizing that.
Got it. Thank you so much for the insight.
Anymore ? Any more questions? Yes, Rainier.
Hi. Thank you for your presentation. Can you give more color whether the weakness has been both for the hard and soft categories? Or it is more both?
When you say-
In our case, because we are not really strong on the soft category.
In our case, we experience both because our soft categories are completers. Our foot traffic or our customers would go to us primarily for the hard categories, and then they see this. If they are not going to us in the first place, we are a destination, right? Then definitely, the soft categories will be affected as well. But for others, I guess the malls, if foot traffic is up because this is going to be the first year where we have zero COVID incidences, then probably, I do not know. But in our case, that is what is happening because, again, our come-on is our hard categories. Definitely our completer items will be affected as well.
Thank you for that, Ms. Jean. On the private labels, can you share more on the strategy moving forward? I guess in terms of the number of brands, how much have the private labels grown, I guess, in relation to since 2019 and up to present, and what is the plan moving forward?
2019, in terms of contribution from 2019, I think just a little bit-
Yeah, it's the profitability of these products that has really surged from the 2019 levels because of a lot of factors that we've discussed before, during the supply chain crisis, et cetera. For the hard categories, for the core products, the greater majority would be our in-house and exclusive brands. We are focusing expansion in categories where we don't have much offerings, and that's in building materials, in appliances. Yeah, those two categories are our main focus now. We're slowly improving in electrical and lighting. Our own brand has gotten some
better market share. We're now really focusing on. We were like with, I think, 20-plus percent only contribution of our in-house brands in building materials. Hardware, we are not likely to focus on it soon. We are also less than 50% in contribution in hardware, but we'll just maintain it at that. Really, the building materials, it's such a wide category.
Yeah. The reason why
It's more of our focus.
The reason why building materials expanded, increased more than the average increase, because we've expanded the building materials. We've added new products, and we've added lines also. I think based on the report, it was building materials and paints that have increased. So there's still soft renovation, if you consider paint as a soft item. And then the building materials, because of the expansion that we did. Of course, hardware is down. I've mentioned about marketplace competing with the hardware marketplaces.
I see. Thank you for that. But I guess in the next year or so, are you planning to just focus on the current lineup of brands, or are you looking to expand the reach or the other categories in terms of the private labels?
We're looking to expand the products in the brands. The brands, more or less, those are the brands that we carry. Maybe we might add maybe one or two more. But generally, the brands that we carry, we will just be adding lines. So in relation to the question in the chat regarding the inferior products. My earlier example was the 304, and we are actually looking to getting, or we have actually started ordering the lower grade ones, 201, to serve the markets where it's a little bit more price sensitive, especially for stainless steel sinks, for example. But we would not label it as 304. We would be straightforward and label it as the lower quality one, 201, and work on, of course, the pricing to reach that market.
Then that's how we're going to look to expanding more, especially for the markets that they don't really care very much for the brand. They're more price sensitive. That's one of the things that we're working at across a few categories. We're piloting some SKUs and rolling it out, and then as the market responds to it, then we'll just continue to add to that.
All right. Thank you so much.
Any more questions? If there's none, we'd like to thank everyone for joining us this afternoon, and hope to see you again in our next earnings call. Thank you.
Thank you.