Earnings Call: Q2 2016

Sep 2, 2015

Earnings release

Industries Incorporated Second Quarter Fiscal 20 15 Earnings Conference Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Ms. Anne Shoemaker. Please go ahead, ma'am. Thank you, Shannon, and good afternoon, everyone. Before we begin, I would like to remind participants that certain statements. Please note that all financial results and outlook information discussed on this call, less otherwise noted, are from continuing operations and all earnings per share amounts are on a diluted basis. As a reminder, on July 20, we announced the sale of the Biddensherman Business. The results from the Biddensherman Business are reflected as discontinued ops. For all periods presented. And now I'd like to introduce today's call participants. With me today are Tom Chubb, Chairman and CEO Scott Grassmeier, CFO Terry Pillow, CEO of Tommy Bahama and Doug Wood, President of Tommy Bahama. Thank you for your attention. And now I'd like to turn the call over to Tom Cho. Good afternoon and thank you for joining us. We are pleased to report very strong second quarter results. We increased top line by 10% and grew adjusted earnings by 20 increased a remarkable 41%. With a 124 basis point increase in gross margin, Lilly delivered an operating margin of 30.2%. These outstanding results clearly show what can be achieved with an emotionally connected brand like Lilly Pulitzer that has A plus product, A plus distribution and A plus communication and is supported with superb execution by a very talented team of people. E commerce continues to be the fastest growing channel distribution at Lilly Pulitzer and our new stores are generating a great deal of excitement as well. There are now 33 company owned Lilly Pulitzer stores compared to 26 last year. We opened 3 new locations in the 2nd quarter, the Mall at Millennia in Orlando, Merrick Park in Coral Gables and Oak Brook Center, our first Lilly store in Chicago. All three came out of the gate strongly and we plan to continue to open stores in locations that will delight the Lilly customer in both existing and new markets. Lilly Pulitzer is an amazing brand that clearly has the potential for significant sustained profitable growth going forward and a team that is fully capable of and intent on realizing that potential. We also continue to see growth in our largest business Tommy Bahama. In the first half of this year, our men's business, which is the anchor of this brand performed well with strong comps. The solid performance we saw in our men's business was partially offset by a softer women's business in the second quarter. We are working on this and believe the actions taken over the last year will make us stronger in women's going forward, particularly as we head into next year. You will recall that over the past few years, we have had significant growth in women's in our own retail stores and e commerce business. Even with this growth, women's remains less than a third of our direct to consumer business. We believe that the total opportunity for Tommy Women's is much larger. To take it to the next level, we've made important changes in the Tommy Women's organization over the past year. We have brought the entire design function together under one roof in Seattle and strengthened the team with a new Head of Women's Design and other key creative staff. The impact of these changes will be evident in the women's Tommy Bahama product that will be on the floor for spring 2016. Another key strategic effort is Tommy Bahama's international initiative. Our objective is to continue to reduce the operating loss from this business while not losing sight of the long term opportunity for profitable growth. Here is what we plan to do. First of all, Canada and Australia are successful profitable markets that we own and will continue to grow. In Asia, we are exiting secondary markets and are intently focused on Japan. This is a large market and we've been pleased to see strong comps in local currency and we want to build on this momentum. Expense reduction remains critical and despite a very tough international environment, we are on plan. Finally, we are exploring the possibility of partnering with successful established operators in select markets around the world. You may recall that Tommy's Canada and Australian businesses began with licensed partners, both of whom successfully established the Tommy Bahama brand in new markets. We currently have a small but strong license business in Dubai and Abu Dhabi. These serve as good templates for how we might profitably run a business in certain markets. We have a lot more work to do in our international initiatives and we are focused on getting it done. Gross margin at Tommy Bahama while still very respectable at 61% was lower than the previous year due to more of our sales occurring in connection with marketing events that ran in the Q2 such as our loyalty card program, the Flipside event and the non comp Polo promotion. We also saw expenses delever at Tommy Bahama as we incurred costs associated with the office move in Seattle and pre opening expenses related to the Waikiki retail restaurant location. We are committed to expense control and believe that we will begin to gain some operating leverage in 2016. We have a lot of opportunity in front of us and Tommy Bahama is one of the premier lifestyle brands in America. We have an outstanding team that we have augmented significantly over the past year and they have never been more committed to driving long term profitable growth in this great brand. Just a quick word about Lanier Close. We have mentioned in the past what a well run and adaptable business we have here. Despite the 14% reduction in sales in the quarter, it is certainly worth noting that both gross margin and operating margin increased in the 2nd quarter. While we see fiscal 2015 as a softer year compared to fiscal 2014, we had numerous initiatives in various stages of development and believe that Lanier has opportunities for growth in the future. Finally, as you know, at the end of March, we committed to work diligently to divest the Ben Sherman business. We are pleased to have delivered on that commitment in the Q2. Not only is the divestiture accretive to earnings, but it strengthens our already strong balance sheet and puts us in an even better position to support multiple organic growth initiatives as well as our long term plan to acquire another carefully selected lifestyle brand or 2. As always, we remain committed to deploying capital to deliver long term value to our shareholders. I'll turn the call over to Scott to discuss our consolidated results. Thanks, Tom. I'd like to walk you through a selection of highlights from our consolidated results for the Q2 of fiscal 2015. Please refer to our press release, which includes some new schedules for the complete results by group and for the company as a whole for the Q2. As Tom mentioned, Lilly Pulitzer had another remarkable quarter, which coupled with a good performance at Tommy Bahama drove our results with consolidated sales increasing 10%. On a consolidated basis, our adjusted gross margin expanded over 70 basis points, primarily as a result of changes to our sales mix. Lilly Pulitzer, which has higher gross margin than our other operating groups, represented a greater proportion of sales in the quarter. Our direct to consumer business, which also has higher gross margin than our wholesale business also increased as a percentage of sales. In addition to the change in our sales mix, our consolidated adjusted gross margin benefited from expansion in both Lilly Pulitzer and Lanier Close. These favorable items were partially offset by lower gross margins at Tommy Bahama. SG and A increased by $10,000,000 over last year, primarily due to incremental costs associated with additional Tommy Bahama and Leip Pulitzer locations and other costs associated with these growing businesses. That said, we were pleased to achieve modest SG and A leverage, primarily due to Lilly Pulitzer's strong performance in the quarter. Our consolidated operating margin, as adjusted, also expanded more than 100 basis points in the 2nd quarter to 14.3% compared to 13.1% in the prior year period. For the quarter, interest expense declined to $737,000 from $888,000 last year. Our effective tax rate in the quarter also declined to 38.1 percent from 39.7% in the same period of the prior year, reflecting higher domestic earnings and lower international losses. Adjusted EPS rose 23 percent to $1.32 ahead of our previously issued guidance. Beginning with the Q1 of fiscal 2015, Ben Sherman has been reflected in discontinued operations for all periods presented. On July 20, we announced that we completed the sale of the Ben Sherman business for approximately $64,000,000 Cash proceeds were $59,000,000 and we reported a net loss from discontinued operations, including an estimated loss on the sale of $1.39 per share in the quarter. Moving on to the balance sheet. Our inventory levels are lower than last year at $105,000,000 compared to $108,000,000 Inventory at Lanier close is lower reflecting the lower anticipated 3rd quarter sales and fewer weeks of supply on hand for replenishment programs. Inventory levels are higher at Tommy and Lily to support anticipated sales growth in these businesses. We're comfortable with the inventory levels at all three operating groups. Our capital structure is strong and we are well positioned to support growth. As of August 1, 2015, we had $45,000,000 of borrowings outstanding under our revolving credit agreement. The significant reduction from last year's level of $107,000,000 is primarily due to funds received from the sales of the insurance business. As of quarter end, we had $182,000,000 of unused availability under our U. S. Revolving credit facility and a weighted average borrowing rate of 1.7%. Our capital expenditures for the first half of fiscal twenty fifteen were $41,000,000 and we expect CapEx for the year to be approximately $70,000,000 In addition to our typical investments in retail stores and IT, I'd like to remind you of 3 significant investments this year. Tommy Bahama will move into new leased office space in Seattle and will open a retail restaurant location in Waukeke. And Lilly Pulitzer acquired additional distribution space. Note that of the $70,000,000 we will record as capital expenditures, approximately $13,000,000 would be funded by landlords through tenant improvement allowances. Looking forward, we're pleased to have increased our outlook for fiscal 2015 to reflect the stronger than planned performance of Lilly Pulitzer in the second quarter. We now expect net sales in the $975,000,000 to $990,000,000 range and adjusted earnings per share in a range of $3.55 to $3.70 dollars On a comparable basis, fiscal 2014 net sales were $920,000,000 and earnings per share were $3.46 on an adjusted basis. Effective tax rate for fiscal 2015 is expected to be approximately 38%. We also have initiated our guidance for the Q3 of fiscal 2015, reflecting the normal seasonality of the Tommy Bahama and Lilly Pulitzer businesses and lower year over year sales at Lanier close, we expect net sales in a range from $200,000,000 to $210,000,000 compared to net sales of $201,000,000 in the Q3 of fiscal 2014. The Q3 is also expected to be impacted by Time Bahamas move to new office space, which is currently planned for later this month and pre opening expenses associated with Tommy's Waukeke Retail restaurant location, which is planned to open late in the quarter. The impact of these two events is expected to be $1,500,000 $1,400,000 respectively. For the Q3, we expect an adjusted loss per share in a range of $0.05 to $0.15 This compares with Q3 of fiscal 2014 adjusted earnings per share of $0.12 We are planning for a strong 4th quarter and expect year over year increases in both the top and bottom line. Thank you for your attention. And Shannon, we are now ready for questions. Yes, sir. Thank And we'll take our first question from Ed Rouba with KeyBanc Capital Markets. And sir, your line is open. Please check your mute function. Sorry about that. Congratulations on a very solid quarter and good afternoon. I guess first on Lilly, obviously extraordinary comp there. Could you give a little bit more insight into kind of what was driving the comp? Was it specific new product introduction? Was there a lift from e com? Were there specific stores that outperformed? Well, we really it sort of was positive across the board, all channels of distribution, bricks and mortar, new stores, old stores, e comm, everything was up. I will say that as we would anticipate, e comm was stronger than stores, but stores were very strong in the comp. And there were, of course, certain stores that outperformed others, but it was just good all the way around. And a couple of things that I would point out, Ed, that I think are noteworthy is that during the quarter, the conversion rate was up over 20% versus the Q2 of last year. And that had a huge amount to do with the comp performance. Traffic was also up. I believe the conversion rate has everything to do with the strength of the product that we had on the floor. And then the other thing that I would call out that it's really a standout in what was a terrific quarter for them was how strong the business was in July. July has typically been kind of a dead month for Lilly Pulitzer, but they specifically played to it a bit stronger this year in the way they flowed merchandise and what they had available on the floor in July and it worked. It drove a very good month in July. Got it. And if you hindsight the Q2, I guess, how would you characterize your performance in respect to the balance at Tommy Bahama between comp and promotion? I know that you've had some success like in Q4 with tweaking some of promotional offer to drive sales, but obviously I know you're really trying to run a full price business. So how would you characterize the way that you ran business in the Q2 and how should we think about promotional level going forward? Well, in the Q2 and I'll let Doug add on to this in a minute, but the if you look at the total sort of Mother's Day, which is actually 1st quarter through the end of the second quarter that total period, we did several marketing events. One of those was new the Polo promotion that we did in the latter part of the second quarter. Overall, those worked really well and drove a lot of business. We do think in the hindsight, I'm glad you brought that up, that some of the stuff we did more in the Mother's Day period probably ended up pulling some sales forward into Q1. So some of the strength that we stall in the Q1 probably came at the expense of the 2nd quarter. Then the second thing I would say is this calendar for the first time since 2009, you had this full extra week between Memorial Day and Father's Day. I don't think we anticipated how that would impact our business maybe as well as we would have liked to in hindsight. And then the last thing is we pointed out in the call was that while our men's comp for the quarter was we think very solid, women's actually comp down for the quarter and we think that has to do with lack of newness and really the product that was offered then. The good news though, Ed, and this is what I feel very good about is I think to the extent we add any weakness in the Q2 and Tommy, I think we are very clear on what those issues are. And Doug and Terry and the team have actually been focused on these issues really for the past year. So those include all the efforts that you're well familiar with to strengthen and add to the women's team and our marketing team in Seattle. These things we think will pay off a lot in the future, particularly as we move into spring of 2016. And Doug, anything you'd like to add on to that? I think the only the last thing and you've covered a lot of Ed's question. On the going forward as we look forward to the holiday, we're looking at all basically doing the same thing we did last year, but we actually believe that we've got some terrific products coming at us as well as some really strong creative from a just product marketing standpoint. So we feel pretty good going forward. Great. And one final question. Tommy, wholesale, I think you indicated was down. Any kind of sense as to what's going on in the wholesale channel? Obviously, mixed results there, at least by the publicly reported retailers. And then are you seeing any kind of share loss do you think on the floors of some of your major wholesale customers? Thank you. Well, I'll let Doug again add on to this at the end. But I think Ed it's very important to remember that in Tommy Bahama, our wholesale business has always had a big specialty store component. And as you well know, that's a very challenged piece of the market right now. Unfortunately, a lot of that segment of the market is really going away and that presents some headwinds for Tommy Bahama. I'm going to let Doug elaborate on this, but in the department store channel, we actually are pretty pleased with the way that we've been performing in the sportswear departments in those channels. And the only way I can elaborate on that a little? Yes. I mean, just focusing on department stores is that we still have a very much a full price offering in department stores. And so as we look at our partners in that channel, we've had a very good year with them and we actually expect to have a good rest of the year with them. And it really comes back to this specialty store part of the market, it's really starting to fall off. And this is something hasn't just started. It's been going on for several years. And if we see anything that's been impacting our business, it's there. Great. Thanks so much everyone. Thanks a lot, Ed. And we next move to Rick Patel with Stephens Incorporated. Good afternoon, everyone, and I'll add my congrats. I had to do a double take on that Lilly comp. Thank you. We did too, Rick. Scott stayed up all night and checking those numbers. I'm sure he did. I also have a question on the weakness at Tommy Women's. So were there any particular categories that missed expectations or was there general weakness around this area of the store? And I think you touched upon this, but is there anything you can do to improve the assortment ahead of holiday or is this more of a spring turnaround? Once again, I'm going to let Doug and Terry jump in here in a second. But I would say that I think we will see some of the impact of the efforts we've made in the design area will start to show up in resort. But in spring 2016, in terms of the product that you'll see on the floor, I really think you'll see a remarkable change spring versus spring. And Doug or Terry, do you want to comment on some of the categories? Yes. Rick, this is Terry. It's been over a year since we've made the changes that we talked about in the remarks. Bradley O'Brien is the new Head of Design for both men's and women's, and she's been on board. We obviously, as Tom just mentioned, spring 2016 will be the first true you see the total impact of that. But you're absolutely right. I mean, we started making we realized we had some issues, started making some changes in the Q3 product that we're shipping and even more changes in the Q4 product. And I think going forward in the Q4, the product we have and the offering we have is very, very good. As far as the deliveries, it was pretty much across all categories. And we've been saying we've been growing the women's business and during this Father's Day period, we were able to take advantage of somebody coming in and buying for him and finding something for her and we just saw that slow down a little bit from the delivery that we had. But we are certain that we're ahead of it and we've got back half product to drive the business. And when we get to spring, we think we've fully turned the corner. And I know it's early, but as you think about 20 16, can you talk about any initial real estate plans for Lilly? I'm curious, do you expect to stay east of the Mississippi as you like to say or do you think we can see some stores in newer markets? Well, I think one of the things that we've been very excited about this quarter that we called out was the success that we had in Merrick Park, which is in Coral Gables, really the Greater Miami area. And while that's Florida, it's not necessarily the part of Florida that we've been the strongest in. So that was nice to see that one come out of the gate strong. And then the other one that we really liked a lot was Oak Brook in the Chicago area. And for us, that's sort of new territory. And we came out of the gates extremely strong there even though we opened, I believe, in August or was it either July or August, which is not necessarily the best time of year for us to open up, but it had a very strong start. And then for next year, we've got a couple of good ones coming. We've got one coming in Dallas at the North Park Mall. We've got one coming at the new Disney development next spring. Sometimes we've got one coming in Destin, Florida next spring and then one in Richmond. So I guess you've got one there that's truly sort of a Western type location for us in North Park. And then we continue to work on other opportunities as well. Great. And then one last question if I may. Just given the pullback in the Chinese yuan, do you see any opportunity to save on manufacturing costs? If you can perhaps remind us what your sourcing exposure to China is like? And if we do see a benefit, when we should expect to see that flow through? Rick, obviously, it's a very volatile situation over there and things are literally changing from 1 hour to the next. But we're obviously paying a lot of attention to it. And in terms of our exposure, China is the predominant sourcing location for us. It's bigger than any other sourcing location. So, we are hopeful that we may be able to pick up some cost of goods savings there, but I think it would be a little premature to try to quantify that in any way. Thanks everyone and good luck this fall. Okay. Thanks a lot, Rick. Thanks, Rick. And we next move to Eric Bitter with Wunderlich Securities. Good afternoon. Congratulations on a solid quarter. Thank you, Eric. In the next quarter, you have the Waikiki set up and the movement in headquarters in Oxford, Taimahama. Could you go over, I guess, what are the gains going to be from the move? And when should we see YQ opening and how should we think about that as we look for the Japanese market? Okay. Did you say the gain from the move, Eric? What are you going to gain in terms of the ability to work harder or better or more efficiently? How do you how does that move affect you? Well, the number one thing that we gain from it is that we will have an office space to work in our existing Tommy Bahama headquarters, which you've seen before, I believe. Unfortunately, our lease ran out after 11 or 12 years. And so while it was good location for us for a long time, our lease ran out. We had to do something. As you know, the Seattle real estate market is very hot and we actually needed a little bit more space than we had in the old space. It does allow us to reposition some people and have departments that should be sitting together, sitting next to each other and do some other updates to the working environment that will benefit us. But it's really driven as much as anything by the lease expiration. On the Waikiki opening, I'm going to let Doug maybe comment on that. That's something that we obviously are very excited about and have anticipated for a long time and it's coming soon. Yes. We're looking at a mid October opening for Waikiki and it's going to be just phenomenal. I mean, I'm gushing over just what we think the facility is going to be able to drive with regards to revenue, both the retail and restaurant, but also give us an opportunity to market not just to the U. S. Where the majority of travel still goes to Waikiki, but also to Japan. So, this is a big deal for us. We've been working on this for a long time, and right now, we're looking at mid October. Great. And when you look at the Lilly Pulitzer store in Chicago, I know it's only been open a while. Does that give you kind of the feel that you can become even more aggressive in the Midwest? I think at Cincinnati last year, do you think that is a strong can be a strong Lilly Pulitzer market? Yes. I think it does have us feeling good. And again, you're correct to point out that it's very early and you don't want to read too much into the 1st 6 or 8 weeks or whatever it is that we've been open there. But it is very, very encouraging to see how well we perform there and it does make us think that there may be more opportunity out there in the Midwest. Great. And finally, I think you've gone to this 365 Resort campaign for Lilly. What's been the response to your customer base for that? And is that something we should obviously expect for the next 300 or so days? Yes. Eric is talking about the Resort 365 approach, which is really a recognition of the fact that Lilly is in fact a resort seek brand and we're going to play to that all year long, including during the fall. And what we saw in July, I think, is an early indicator of how that can play out for us, where in a traditionally weak month for Lilly Pulitzer, we actually had quite a good month. We believe that we're going to see that continue through the fall months and we're pretty excited about it, but we'll see. Cool. Thank you. We have the 3rd and 4th quarters play out. Thank you. Thanks, Eric. And we'll take our next question from Pamela Quintigliano with SunTrust. Great. Thanks so much for taking my question and congrats on a fabulous quarter. Thank you, Pat. So I'm going to start I have a few questions for you guys. Starting I guess with Tommy, can you just remind us again the percent of the business that is women's? And also are you now fully staffed or are there still open positions that need to be filled in Tommy? And then lastly, just performance of some of the newer classifications like sunglasses and your reflexology and how all that's been doing and the customer has been responding? Okay. Just by way of reminder, the women's business in our direct to consumer part of Tommy Bahama stores in the e comm is a little bit less than 30%. And then in wholesale, it's much smaller than that. So total business, you're down somewhere in the low 20s, I think. And in the direct the very important direct channel, it's less than 30%. And Terry and Doug will tell you that they don't have any problem seeing over time without putting a specific date on it, but at some point being 50%. And then in the wholesale arena, obviously, it's very underdeveloped and there's a lot of white space there. On the design function in Tommy Bahama, they do still have 1 or 2 key roles that they're looking to fill in, but they've got some great heads of design in place and a great team in place. And then finally, on some of the new classifications, maybe Doug can comment on that. Yes. I mean, just to go back on wholesale, from an opportunity standpoint, we do see women sportswear as a huge opportunity at wholesale, but we have a very strong women's swim wholesale business right now. It's not big in dollars, but in the size of the market, it's actually been very successful and profitable for us. Just to go right to some of those new launches, the Maui Jim launch that we did at the end of April in our retail stores and then online in June has been very successful. And to think that we're just starting to really kind of connect with that brand and bringing into our environment. Their guest has responded by coming in, but also our guest has been excited to have access to Maui Jim. And so it's been a really, really good relationship. Relaxology has been kind of a split success rate. The men's has worked very well. Women's has not performed the way that we wanted it to. However, the sandal in both Relaxology has worked extremely well. So it's exciting because it's a footwear, it's a new category that we've been really pushing and actually have success and see it work in our own stores, but also in wholesale for men has been very exciting. And then just a follow-up quickly on wholesale before turning to another question. So your wholesale accounts have seen the spring product, I'm assuming, for the Tommy Women? And have they if so, have they responded well to it? Doug, do you want to take that one? Yes. I mean, yes, now we've been in market now with it for about a month. We've had some good response with and it's funny we talked about specialty stores with on the men on the wholesale side for men. We've actually had a nice distribution that's starting up in the Southeast on women's, and we've had a positive response there. We've had a positive response in some of our key department store accounts, but it's still a small business for us. And as we see it, it's going to take a couple of years because once you get it placed, it's got a retail. And so, we're excited because we're getting placement and now it's got to perform on the floor. Okay. So it's not as though despite the product not performing as well as you would have hoped to this past quarter there, it seems like people are liking it for spring even though it's early days on the wholesale side? Yes, absolutely, because it is so new. And I mean, the product that we're coming out with spring, it's definitely when you see it, it's more sophisticated, not just in quality and design, but in color and print. And there's definitely there's no doubt that this is this has come from a new team, but it's still Tommy Bahama. Okay. Thank you. That was really helpful. And then turning quickly to Lilly, and sorry if I missed this before, but post the Target event, have you guys noticed any new customers? I guess just looking at online activity, any sticky new customers that you didn't have before that you could kind of correlate? Yes. We've definitely added a significant number of new customers this year, Pam. And there's no doubt some of that came from all the buzz surrounding the Lilly event, but I think there's more to it than that. I think we would add a lot of those as a result of some of the other things that we've been doing in Lilly. And it's a little bit hard to figure out what came from where, but we have added a lot of new customers this year. And you mentioned in the past about some exciting events for the fall and you had mentioned a little bit in a previous answering a previous question. But just can you remind us incrementally what you're doing different this year than last year with Lilly as we think about the fall marketing? Well, I think the big focus is this Resort 365 concept that's really developed very strongly over the last year. And I think we're going to see this fall very much. I think you're going to see what Resort 365 looks like for Lilly. And based on the early read on that, we think it's going to have a positive impact on our business. It is not going to turn fall into spring for us. So I want to manage expectations, but I do think we can see some good year over year growth in our fall business there. And to I guess to dig a little bit deeper, remember last time we had spoken about in conjunction with New York Fashion Week or in conjunction with Fashion Week, you would be doing some events. So when we think about touch points with the consumer and just how you're communicating differently beyond the actual campaign being different? Well, we did a resort line presentation a couple of months ago. It wasn't really a fashion show per se, but it was a New York based presentation of the resort 2015 line. And there's certainly some imagery of that available. I think you can probably find it online or we could send it to you. So that was part of playing to this whole Resort 365 idea. And if you look at our website, look at the Instagram postings that we're doing, all the other social media that we're doing, the mailers that we do, it's all playing into that. And it's the message is clear, unequivocal and strong. And it's But no incremental mailers or is there an incremental because I agree it's very strong and I've seen the imagery and I think it's really capturing the new customer that's out there who's already engaged. It's great timing. Is there anything incremental year over year when we think about that? I'm not 100% sure about that, Pam. Off the top of my head, I don't have the year to year recap of mailers and gift with purchase events. Right. That's where I was going. Okay. I don't have that at my fingertips and I apologize. Well, then my last question, because you guys have been so generous always with your time is, some other companies have commented, just with the volatility in the market, those who cater to a little bit more of an affluent consumer who may be invested in the market have seen some changes in behavior on those days of extreme volatility or just overall more concerned with investments? Are you seeing any of that with your customers? I think there's certainly that potential for that to impact us. We've certainly seen it in the past. If you have a major event or a sustained downturn in the markets, it can both the stock market, really the residential real estate market where people tend to get a lot of their feeling of well-being or lack of well-being. So those things can impact us. I'm always a little reluctant to correlate the day to day fluctuations with that. I suppose you could, but I'm always a little reluctant to do that. There's no doubt a sustained downturn can have an impact on our business because our guests in both brands are clearly people that are pretty affluent and have both financial assets and tend to have some meaningful real estate assets as well. Okay. Well, thank you once again and best of luck going forward. Thank you, Pam. And it appears there are no further questions in queue at this time. I'd like to turn the conference back over to Mr. Judd for closing remarks. Okay. Thank you, Shannon, and thank you again for your time this afternoon. We have a lot to be excited about at Oxford, and we very much appreciate your interest. And ladies and gentlemen, that does conclude today's conference. We do thank you for your participation. You may now disconnect.