Good afternoon, everyone. Welcome to Superior Group Company's Second Quarter 2021 Conference Call. With us today on behalf of the company are Michael Benstock, the company's Chief Executive Officer Andy Dumont is Chief Operating Officer, Chief Financial Officer and Treasurer Phil Cusett, Chief Strategy Officer and from the Promotional Products division, we have Jake Hemmelstein, BAMKO's President. After the speakers' opening remarks, we have a Q and A session. This call is being recorded and your participation implies that you agree to this.
If you do not, then simply drop off the line. Now I'd like to turn the call over to Holla Elja Beanie, Senior Manager Director of 3 Part Advisors, who will read the safe harbor statement. Please go ahead.
Thank you, and good afternoon, everyone. This conference call may contain forward looking statements about Superior Group of Companies the Company within the meaning of the Securities Act of 1933, the Securities Exchange Act of 1935, the Private Securities Litigation Reform Act of 1995 and all rules and regulations issued thereunder. Such statements are based upon management's current expectations, projections, estimates and assumptions. Words such as will, expect, believe, anticipate, think, outlook, hope and variations of such words and similar expressions identify such forward looking statements, which include statements on the impact of COVID-nineteen on the company's business, including inventory, supply chain, manufacturing capacity at the company's own and contract manufacturing facilities, service capacity and customer demand. Forward looking statements involve known and unknown risks and uncertainties that may cause future results to differ materially from those suggested by the forward looking statements.
Such risks and uncertainties include, but are not limited to, the following: the effect of the COVID-nineteen crisis on the U. S. And global markets our business operations, customers, suppliers and employees general economic conditions in the areas of the United States in which the company's customers are located changes in the markets where uniforms are worn, where promotional products are sold and where call center services are used the impact of competition the company's ability to successfully integrate operations following confirmation of acquisitions and the availability of manufacturing materials as well as the risks and uncertainties disclosed in the company's periodic filings with the Securities and Exchange Commission, including the company's annual report on Form 10 ks the year ended December 31, 2020, the quarterly report on Form 10 Q for the quarter ended June 30, 2021 and the 8 ks filed recently. Shareholders, potential investors and other readers are urged to consider these factors carefully in evaluating the forward looking statements made hereunder and are cautioned not to place undue reliance on such forward looking statements. The company does not undertake to update the forward looking statements contained herein to conform to actual results or changes in the company's expectations, whether as a result of new information, future events or otherwise, except as required by law.
Please note that all growth comparisons that management makes today will relate to the corresponding period in 2020, unless otherwise noted. With that, I'll turn the call over to Michael.
Good afternoon, everyone. Thank you, Hala. I think your portion of this gets longer longer every single quarter. Thank you all for joining us to discuss our Q2 results. In addition to Andy and Jake, I'm pleased to be joined by Phil Cusick, our recently appointed Chief Strategy Officer and the newest member of our C suite.
Phil is a dynamic leader with proven strategic acumen and we're excited to further tap into his expertise. Additionally, Jake has been an invaluable leader serving as COO and CFO of BAMKO these past few years. His depth and breadth of business and industry experience as well as his prior M and A work is a tremendous asset. His recent promotion to President is certainly well deserved. For the call format, I'll open with 2nd quarter highlights and Phil will provide higher level thoughts on our strategic direction, followed by Jake's review of BAMKO.
Andy will then provide an operational financial review. As usual, when we are done, we will open the line for questions. So let's get started. Sales are quickly moving in the right direction. Our core businesses are prospering.
In particular, we are seeing a faster than expected recovery in most of the sectors of our Uniform business that were weakened by the pandemic. We are also seeing a return to normalized yet strong levels in our other uniform channels. Overall, 2nd quarter results and visibility for a strong second half gives us greater confidence to update our sales guidance that we gave during our Q1 call. We now expect to approach $525,000,000 in revenue for fiscal 2021 versus our guidance last quarter of approaching the $500,000,000 mark. This puts our revenue target on par with 20 twenty's spectacular numbers.
To keep some perspective here and I'm going to throw out a lot of numbers now, I hope we can keep up with it. In 2019, our total sales revenue was $377,000,000 In 2020, our sales revenue were $527,000,000 exceeding our budgeted $408,000,000 by $119,000,000 Our core non PPE sales for 2020, this last year, was $396,000,000 Our anticipated sales for this fiscal year will greatly eclipse our actual core sales results last year. Our 12.5% guidance with respect to our growth from 2025 remains the same. We are on track to meet our consolidated CAGR goals organically achieving nearly $900,000,000 in revenue in 2025 and along with acquisitions expect to exceed $1,000,000,000 Let's take a closer review of our segments. As anticipated, our Uniform division serving both healthcare essential employee ID end markets are normalizing when compared to the frenetic pace of pandemic purchasing last year.
For HPI, activity is booming and with some customers demand is nearing and even exceeding pre pandemic levels. This is particularly evident in lodging, entertainment, hospitality, food service and transportation. As corporate customers realize rebounding sales, they are returning to initiatives paused during the pandemic, including uniform upgrades and market checking RFPs. As a result, we are also seeing a market increase in customer acquisition opportunities. We are excited about initiative we began last quarter at sales team with our BAMKO sales team as a shared service to move both divisions towards a more direct sales approach versus the cross selling approach that we've successfully executed since our acquisition of BAMKO in 2016.
I can tell you this, this exponentially deepens our ability to uncover and participate in many more opportunities. This strategy, which we beta tested in Q2, is already paying dividends. Jake will speak more about this in his remarks. Our remote staffing division, the office gurus continues to post remarkable results as existing customers add seats and many new customers are onboarded. We're seeing more openness than ever for nearshore outsourcing as many of our customers and prospective customers are experiencing difficulty in hiring in the USA.
Many of these had their teams in the U. S. Working remotely during the pandemic and have come to the realization that many of the tasks they thought had to be done in office could be done in a remote environment and they're now looking to do the same work at a lower cost with us. Customer preference for in center work is somewhat of a mixed bag. We're seeing more customers willing to accept the hybrid solution of work from home and from center.
Regardless of their choices at our current rate of growth, we'll have to only slightly tweak our future investments in infrastructure to accommodate this unprecedented opportunity for growth. Overall, we continue to capitalize on tremendous tailwinds resulting in a quarter where we added 4 37 billable agents across all sites, keep in mind that we added 184 agents in Q1 for a total of 6 21 agents for the first half of twenty twenty one. To put this in perspective, our original 2021 forecast, which was ambitious, called for 3 62 new seat requirements for the entire year. We've already put on 621. From a profitability standpoint, the team delivered outstanding results again and an operating margin of 24%.
BAMKO delivered the 3rd consecutive quarter of record sales in core promotional products. I'm going to leave the rest of our discussion around BAMKO to Jake. Turning to our operating environment, global logistical and supply chain challenges as well as increased prices for raw materials persist for many businesses, including ours. We are not immune from the disruptions, but our proactive stance on building our inventory early has provided a level of insulation and gives us on a longer term basis further advantage over smaller competitors. In addition, like others, we also face hiring challenges domestically in lower wage jobs, which has presented a headwind for our distribution centers.
We believe the coming cessation of the supplemental unemployment benefits combined with our creative and aggressive recruitment, incentive and retention programs should allow us to maintain needed staffing levels. In regard to the recent tragic events in Haiti, fortunately, our own managed facilities in Wanamint are far removed from the epicenter of disruption in Port au Prince. The company's production facilities remain largely uninterrupted except for a couple of days following the tragedy and a 2 day government mandated mourning period. Overall, we have not experienced a material impact to our business and our inventories of the products made in those factories, as I said earlier, are more than adequate to offset any unexpected disruptions. We're also still in aggressive hiring and training mode in our Haiti facilities as we begin to staff now that the 3rd facility has been open.
As I said at the start of the call, we continue to be impressed by the rising leaders in our company. Our team is passionate, driven and hardworking. They are the key to our future success. Phil's entrepreneurial drive, innovation and strategic mindset are assets to the company and we're pleased to welcome him as our 1st Chief Strategy Officer. Phil, take it from here.
Thank you, Michael. I'm very excited to take on this new role and to help shape the future strategic direction of SGC as we enter our second 100 years of growth. I'm an entrepreneur by nature, so I know that growth and the ability to reinvent is really central to the success of any company. This ability to reimagine future of this business is built into the DNA of SGC. It's the reason why after 100 years, we are more than just surviving, we are thriving.
Reimagining the future of this business is the main focus of this role and the primary reason I'm so excited about it. We have built an incredible foundation upon which we can create future growth. Some critical areas to build upon will be shaping our technology strategy, focusing on client experience, expanding our M and A efforts and enhancing our talent throughout the organization. I will touch on each of these briefly. First, shaping our technology strategy.
Nowadays, every company needs to be a tech company and SGC is no different. Technology already weaved into every aspect of our business. This will expand rapidly in the next decade as we benefit from the developments in AI, machine learning, advanced robotics and blockchain. Some of these developments will involve building upon our existing proprietary technologies that we have developed in house and some of these efforts will require being at the forefront of new technologies that can improve our business. On the client experience side, we have some amazing highlights with some of the largest companies in the world, showing just how good we are at customer experience.
However, we must not rest on our laurels. We will be obsessed with client experience and we will work diligently to improve it at every level. Our M and A strategy will continue to build upon our rich success we have had with the previous acquisitions. We have made 6 acquisitions in the last 8 years and their effect has been transformational. We will be focused on maintaining a robust acquisition pipeline, so we can continue our current strategy of being extremely selective in terms of who we acquire.
Lastly, on the talent front, we know that talent is everything. As a global company, we have the luxury of hiring anywhere in the world. Therefore, we will be laser focused on making sure that we attract and retain the best talent in the world. This organization is an entrepreneur's playground, and I feel privileged to be part of it. We are called the 100 year old startup because we are continuously experimenting with new ideas.
Our culture encourages this type of experimentation and is the primary reason we will be a $1,000,000,000 company within the next 5 years. Now I would like to turn the call over to Jake Hemmelstein. Jake served as our CFO and COO of BAMKO before being promoted this quarter to become our new President of BAMKO. Having worked with Jake for 8 years, I can think of no better person to take on this role. I'm excited to watch as his exceptional leadership elevates the business to new levels.
Jake? Thank you, Phil. This is such an exciting time for SGC and for BAMKO. I'm honored and humbled to lead such an incredible team. Now on to the quarterly review.
As expected, PPE sales slowed down substantially this quarter. Our extraordinary PPE sales of Q2 2020 did not recur in Q2 2021. That did not come as a surprise. However, we are thrilled to report that our core promotional product business has experienced resurgence in sales, and we expect that to continue throughout the rest of the year. Overall, BAMKO ended the Q2 of 2021 with revenue of $48,700,000 gross profit of $16,000,000 and operating income of $5,000,000 While these figures represent year over year decreases from our extraordinary PPE driven Q2 of 2020, when you consider the anomalous nature of our PPE sales a year ago, this quarter's results were phenomenal.
I'm particularly happy to report that this quarter's promotional product revenue was at an all time high at $47,700,000 Promotional product revenue made up over 98% of total quarterly revenue. Perhaps most impressively, this is an 85% increase over the same period last year. This now marks the 3rd consecutive quarter that our division has set a new all time high watermark from promotional product revenue in the quarter. This is our core business. It has come back with a flourish and it's exciting that we continue to trend upwards to even greater heights.
With the rollout of the vaccine in the U. S. And the easing of COVID restrictions, the promotional products industry started to see an increase in spend during Q2. Clients in the entertainment and travel sectors have increased their spend much quicker than we anticipated. Marketing budgets have started to open back up and we have already seen companies planning for year end employee gifting.
While the promotional product industry as a whole was up about 3% or 4% in the first half of twenty twenty one compared to the first half of twenty twenty, it remained down by about 20% when compared to pre COVID levels. Our backlog at June 30 was $67,600,000 almost entirely made up of core promotional products. This backlog is 66% higher than at March 31, another sign of the continued resurgence in promotional product spend. We've discussed our ability to create operating leverage with scale in prior calls, and this quarter continues that trend with a very strong operating margin of over 10%. Overall, our BAMKO team executed well during the 1st 6 months of 2021, posting a 6% sales gain compared to an exceptionally strong first half of twenty twenty.
We benefited from continued market share gains, PPE customer conversion to branded merchandise customers and sales contribution from our January 2021 acquisition of Kit by Design. On the M and A front, we are seeing more opportunity surface as a result of pandemic related impacts as well as potential tax law changes. The pipeline is robust, including many unsolicited proposals seeking out SGC as a strong potential partner. In Q2, we altered our approach on cross selling promotional product and employee ID uniform programs, now allowing BAMKO's 70 plus sales reps to directly sell uniform programs to both new and existing clients. This move made sense given promotional product and branded uniform programs typically have the same buyer groups within our customers.
This represents a vast expansion of the team selling large corporate uniform programs and has already yielded many significant opportunities that otherwise would not have been uncovered. Finally, I'm proud to announce that BAMKO was ranked number 11 in the latest listing of top promotional product distributors in North America. We jumped 8 spots this year from our position at number 19 last year, and we achieved the biggest growth rate of any company on the entire list. This speaks to the strength of our customer value proposition and the incredible BAMKO team, which continues to receive high industry honors. BAMKO was also named as 1 of 20 21's greatest companies to work for in the promotional product industry for the 4th consecutive year.
I'll now turn the call over to Andy for his operational and financial review.
Thanks, Jake, and good afternoon, everyone. We're on pace with capital investment initiatives across our distribution facilities. At our Eudora, Arkansas Center, beta testing of new upgraded robotics are slated for Q4 with the go live launch early next year. The consolidation is expected to yield approximately $2,000,000 of annual savings as well as provide significant technology advantages and efficiencies. Continue to reap the benefits of improved efficiencies resulting from higher automation and robotics in our CID, Dallas distribution center as well.
And our 3rd manufacturing facility in Haiti is now beginning operations. Turning to the financial highlights, consolidated net sales exclusive of PPE sales increased by $23,000,000 or approximately 23% compared to the Q2 of 2020 as we continue to see a rebound in markets and we continue to take additional market share. Including PPE, consolidated sales declined 18% compared to the prior year quarter to $130,800,000 This decrease in PPE sales was in line with our expectations. Uniforms and related products net sales excluding PPE decreased 7% or $4,500,000 compared to last year. PPE sales were $5,800,000 versus $8,900,000 a year ago.
Additionally, Q2 2020 sales of non PPE healthcare products included an extraordinary surge in demand that has been reduced as we move through the pandemic. We were successful in adding new business and channels to offset the bulk of this change and are well positioned to continue to capitalize on this growing part of the market. We are seeing an offset to the higher PPE healthcare uniform demand in Q2 last year with a resurgence in demand for non healthcare recovering industries such as restaurants, transportation, the hospitality industries. As we progressed through the pandemic, we felt it was critical to provide backlog information each quarter to provide transparency on the PPE business that had been booked but not yet delivered. Now the crisis PPE is expected to be a significant portion of our Uniform revenue moving forward, our backlog for Uniform sales consists primarily of orders that will ship very quickly and is not meaningful for evaluating the state of the Uniform business.
Jake's already reviewed BAMKO's results, so I'll move to the Office Gurus. The team reported tremendous growth and exceeded expectations with net sales after intersegment eliminations up an impressive 73% to $13,900,000 Growth is attributed to expanded customer relationships and onboarding new customer engagements at an incredible rate. We continue to have tremendous tailwinds in this segment. For the quarter, consolidated gross margin percentage of sales increased to 36.1%, a 100 basis point improvement from 35.1% in Q2 2020. Our total SG and A expenses decreased approximately 7%, reflecting a decrease in bad debt expense of $2,800,000 and as a percentage of sales, SG and A was 25.9% versus 22.8% in Q2 last year, due primarily to the lower PPE sales in the current period.
Income from operations for the Q2 was $13,300,000 compared to $19,600,000 in 20 20 2nd quarter. Operating margin was a solid 10.1% compared to 12.3% last year. During the Q2, we terminated our 2 non contributory qualified defined benefit pension plans, which were fully funded. Consequently, we recognized a settlement charge of $6,900,000 during the 3 months ended June 30, which represents the acceleration of deferred charges previously included within accumulated and other comprehensive loss and the impact of remeasuring the plan assets and obligations at termination. The pension plan terminations did not require cash outlay by the company.
Net of the recognized tax benefit of $600,000 this charge resulted in a reduction of diluted earnings per share of $0.39 during the Q2 of 2021. Our effective tax rate for the quarter was 17.3% compared to 19.6% a year ago. The effective rate for Q2 2021 was favorably impacted by $800,000 of windfall tax benefits from stock options exercised during the quarter and $600,000 of stranded tax benefits that were recognized as a result of the termination of the pension plans. These benefits were partially offset by the non deductible pension termination charge. Net income was $4,600,000 or $0.28 per diluted share compared to $15,200,000 or $1 per diluted share in quarter 2 last year.
Excluding the impact of the pension termination charge and related tax benefit, net income would have been $0.67 per diluted share in the Q2 of 'twenty one. Also of note, our Q2 2020 represented the highest quarterly earnings in the company's 100 year history. We are in a strong liquidity position and at June 30, we had cash and cash equivalents of $7,500,000 an increase of $2,400,000 in the current year. CapEx for the first half of the year was $11,300,000 We are on target with our CapEx investments in automation and efficiency and still expect to be in the range of $16,000,000 to $17,000,000 for 2021. In recognition of our continuing strong performance, the Board increased our regular quarterly dividend by 20% in the 2nd quarter to $0.12 per share.
In total, for the 6 months ended June 30, 2021 and 2020, we paid $3,400,000 $1,500,000 respectively, in dividends. I'll now turn the call back to Michael for his closing remarks and a general outlook.
Thanks, Andy. That was long, but a lot of information in there. Those of you who've been with us before, we are you know that we're always laser focused on our future. And our top priority still remains having a disciplined execution of our long term strategies, both organically and via targeted acquisitions. SGC is on its best footing ever and I'm confident that our talented, hardworking, passionate leadership and workforce will take us to new heights in the coming year.
We strongly believe we have the right plans in place to grow beyond being a $1,000,000,000 business in less than 5 years from now. These are very exciting times for SGC. With that, we'd like to open the call for your questions.
First question comes from Tim Mulrooney, William Blair. Please go ahead.
Michael, Andy, Phil and Jake, good afternoon.
Thank you for taking my questions. Sure. You're welcome.
So on the Uniform business, excluding PP and E, I think the Uniform business was down about 7% on a tough comparison. But I do think those comparisons start to get easier in the back half of the year. So with that in mind, based on what you know today, would you expect to see year over year growth in this business in the second half 2021 excluding PP and E?
I'll jump in on that. Yes. It's Michael. Thanks for the question. It's a good one.
With the resurgence we're seeing of what was considered non essential businesses during the pandemic and the fact that we're playing catch up at this point. I think we pretty well explained that from a service standpoint. These logistical nightmares have been quite unusual. And also, our customers ordering 2 or 3 times what they normally ordered in a quarter has left us pretty shy of some safety stock in some areas. So as we catch up, we're going to see a quick resurgence of that business.
On the other hand, we're starting with the healthcare business, we're starting to calm down a little bit, although we're in new channels and we're selling for certainly our fashion scrubs and a lot new channels at walmart.comandtarget.comand zappos.com recently was a new one. On the institutional side, a lot of that will depend on what happens with the pandemic. As hospital censuses are going up, we expect to see somewhat of a resurgence in our scrub apparel, our patient apparel, even our isolation gowns, barrier coats and all the items that were bought in great quantities last year. So yes, we expect our Uniform business to be to have leveled off. The end of the year, certainly to have made up the difference then and we're working to create the environment where we'll even go beyond that.
Okay. Yes. Thank you, Michael. And you kind of adjust my next question, which was going to be specifically on the healthcare opportunity, because you mentioned new channels helping to make up for some of the difficult comparison with PP and E. It's my question was going to be, are these new channels mostly on the institutional side or on the retail side, but you named a bunch of retail channels.
So is it fair to say that is that where the larger opportunity is for you guys moving forward? Is it mostly on the retail side when it comes where the growth is going to come from?
It's really
a mixed bag. Yes, on the retail side for sure, but we also have the new distributor with a press release a couple of months ago, SanMar, who's moving our product through the branded merchandise customers of theirs, 22,000 customers of theirs. I think we also have the indie product, which is kind of a crossover between Fashion Seal Healthcare and CIP that I believe UniFirst and others have announced that they're adopting as their fashion product for the institutional healthcare side of business. So it's a very mixed bag. It really is going to come from both of them.
Okay. Thank you. And I wanted to say congratulations to Phil and Jake on your promotions. Thank you. Jake, you're welcome.
Jake, to you specifically, it looks like the backlog at BAMKO is very strong. And I know you helped out a lot of folks during the pandemic with PP and E, including a lot of new customers that you hadn't previously engaged. So I guess my question is, how much of this increase in backlog, if any, do you think is the result of converting some of those PP and E customers into traditional promotional products customers?
Yes. Certainly, there is some of that, right? We've stated it before and it stays pretty consistent. We've converted about a third of our PPE only customers in 2022 promo customers, right? We were there and they trusted us in their toughest times when they needed PPE and we've been able to convert about a third of those into promotional product customers.
And we continue to work with these customers to find additional opportunities to penetrate and get the promotional product business. So we think that's only going to continue to expand. And I think across the board, our backlog is really strong. And I think you mentioned in the script, but the most impressive part of it is that virtually none of that is PPE. It's all promotional products and branded merchandise.
And that's what's exciting is that we're seeing that resurgence coming into what we think is going to be a really strong holiday season as well.
Great. Okay. Yes. Thanks for that commentary. If I could just sneak one more in.
I don't know if this would be for Michael or Andy or Phil, but it's on PP and E. So you expect PP and E to be, I guess, about $45,000,000 this year, down from $130,000,000 last year, but still well above the $4,000,000 or so that you generated in 2018 2019. Is this level, this $45,000,000 kind of what you'd expect moving forward, PP and E revenue to be much lower than the peak in 2020, but still remain elevated relative to pre COVID levels?
Yes. I mean, I think the 45,000,000 dollars I mean, it does include a little bit of crisis PPE that we've already that we had and really more in the Q1. Our expectation let me back up a little bit. I mean part of the PPE product that we're selling has kind of become part of uniform programs or starter kits for the gig economy type people. I think going forward, people are going to have hand sanitizer in their starting kit.
They're going to have a mask. They're going to have gloves. Some of that will just going to be in our normal product and not really show up as being PPE. But from an ongoing basis, I think your pure PPE non Chrysler type, you're probably talking somewhere in the $5,000,000 to $10,000,000 a year.
Got it. Okay. Thank you, Andy, and thank you all for taking my questions.
Thanks, Tim.
Thank you. Next question comes from Tim Harte, Mumphrey Investments. Please go ahead.
Great quarter. I had two questions. The first, cash flow outlook for 2021. It looks like in the first half of the year, there was a big use of working capital and you mentioned that CapEx was sort of heavily weighted there. So I was wondering if you could just sort of address how the cash flow, free cash flow will go for the full year of 2021?
And the second question was addressed to Phil, just to talk a little bit more about the specifics around the technology strategy and the customer experience, which were the first two items you highlighted in as your focus.
Okay. Relative to the cash flows, I mean, the first half of the year really included some extraordinary incentive type payments that were based off of last year relative to really executive and sales comp across the company as well as significant earn out for from some of our acquisitions, primarily in the promotional products arena, as well as paying income taxes on those items. So there was a heavy use of that during the first half. We also, as Michael mentioned, we did beef up our inventories a bit due to the supply chain. And just to be prepared for that as we go forward, We would expect to see that start leveling and also work its way back down now as the supply chain continues to work its way out.
From a capital expenditure perspective, as I mentioned in my remarks, we do expect for the year that number is going to be somewhere between $16,000,000 $17,000,000 So we would expect from here we should be positive from the cash flow
perspective. Tyler, you want to answer that?
No. And Phil was the second part of that question.
Yes. I'll take the second part of that question. So without disclosing too much, on the technology front, we've been heavy into technology for quite some time. And I would say we've been well ahead on the technology curve in our industries, in our respective industries for quite some time. The exciting part now is we're seeing more and more ability to integrate technology further into our business.
So over the course of the last couple of decades, I would say the technology has been an advantage and been an advantage that we've been able stay ahead of our competitors on. But we believe that we can widen that gap by embracing some of the newer technologies out there that are really making advancements and permeating various industries across the board. I mentioned AI and machine learning and advanced robotics and blockchain on the supply chain side. And that's stuff that we're already working towards. In many cases, we already have some pretty advanced robotics right now in our warehouse and we have some pretty good direction in terms of how AI might affect our business in the coming years.
And so we're looking forward to seeing that really come through because we think that will widen the gap between us and our competitors on the technology front. On the customer side, to the second part of your question, our focusing on our client experience and making sure that what we've done in the past and what we've delivered from an experiential perspective continues in the future, that's 1st and foremost. I mean, I think that's something that in any business out there that's worth their salt is going to be focused on their customers' experience and making sure that their customer not only goes and is happy with what they've got and what the services that we're providing, but are actually fans of our business. And I think more and more we get business from referrals and the main reason why is because of the fact that we've actually developed fans within our customer base. And so that's really our focus is how do we go and make this experience so good that we're not only going and making the customer happy, but also the ranting and raving to various folks and referring business to us in the future.
Can you measure customer retention and sort of fan level among the customer base?
Yes. That's something that we measure and we'll continue to measure.
Great. Good. Thanks a lot.
Thank you.
Next question comes from Kevin Steinke, Barrington Research. Please go ahead.
Hey, good afternoon, everyone. I wanted to start off by asking about Michael. I think you mentioned in your prepared comments seeing more opportunities to bid on new uniform programs. And can you just expand on that a little bit and what's driving that pickup?
I think there are so many factors driving it, but let's start with the fact that everybody is struggling to get new employees right now at the low wage jobs that people are most people are wearing uniforms. So they're enticing them by putting them into more uniforms, par levels have improved. We've been told, instead of giving an employee 2 sets of uniforms, they might be giving them 3, 4 or 5. Also turnover has increased. So you hire an employee, 2 weeks later he decides to go somewhere else.
You've read the jobs reports about people leaving their jobs. So they have to go get a new uniform for the new person they hire. There's another sale for us. I think healthcare workers have been working on the retail side, have been working crazy hours of overtime. They've made a lot of money doing it.
They're buying more fashion scrubs. I think we've spoken about this before, Kevin, that whenever we come out of a recession, which is really our only context here, we've never come out of a pandemic, at least not that I remember. Well, we did in 'nineteen, 'twenty. But whenever we come out of recession, we always come out stronger. We always see a flurry of marketing dollars being spent, makeovers of stores that have been very, very slow.
Everybody's about branding, rebranding themselves. We see people do new logos, new logos require new RFPs, recolorations of their current logos and their stores require new RFPs for uniforms that will match all of that. It's the normal flurry we saw post the big recession a decade ago, more than a decade ago. And it's something we've gotten used to. And I think because we were so active during this recession, during this pandemic and reaching out to prospective customers, we didn't get lost.
While a lot of other people, I think, dumped their head in the sand, collected their PPP money and said, I just got to make it through this period of time, we got even more aggressive. I think our strategy with respect to that we described with respect to HBI was now going from 5 sales people to 75 sales it's huge. There is an opportunity in this country that we will not uncover, I believe, and it's many more than we could have in the past. And we're training those people up, but quite frankly, we have a big team behind that group of 75 people that's ready to start getting in front of customers and presenting. And all those 75 people have to really do is get us face to face appointments or in today's world, Zoom appointments.
So I think everything is moving in the right direction from a standpoint of RFD activity. I think a lot of people were let down during the pandemic too, who needed good service. And this logistical nightmare is truly that, but I do think that we're much better positioned than most of our competitors 45 days, taking 90 days now. And it's pretty nightmarish. You're talking about what used to take 45 days, taking 90 days now.
And when customers ordering patterns pick up and suddenly you find yourself short of inventory because of that, but you can't get in inventory in any faster, I think it's hurting a lot of our competitors. So I think it's a I call it the perfect storm, but for us, it's like the rainbow. We just have to follow it to the pot of gold and that's what we're doing.
Okay. Yes, that sounds great. I wanted to follow-up on just you're now targeting sales in 2021 approaching $525,000,000 compared to about $500,000,000 previously. Is that increase being driven by any specific business? Or is it just kind of across the board strength in all your segments?
Kevin, it's really across all of them. I mean, we feel very good about where we're at with all the businesses. Michael talked clearly about how well POG is doing, Jake covered on BAMKO and the Uniform business is bouncing back stronger.
So we feel very comfortable.
Really, it's going to be across the board.
Great. Thanks. And then I think something that you didn't mention on the call unless I missed it was last quarter or 2, you've talked about CID and their plans to expand internationally. Can you just provide us an update on that initiative and where you stand with that?
Sure. I can provide a little bit to you without giving away any competitive advantage. We are starting to ship and take orders for our Poland warehouse. We have hired a person away from a consulting firm that was working for us, where they agreed to let that person work for us directly as an employee. We have already resumed our strategy of going to trade shows in Europe and whereas last year we did no trade shows, the year before we did.
Keep in mind that our business last year for international was about $30,000,000 overall across all of our segments. So we're looking to turn that quite frankly into $100,000,000 business in the next few years. And we think we've got the makings to do that. We've got the right people. We've brought another sales executive into our international group.
We're doing some very serious deep strategic planning right now to make sure that we're focused on the right areas of Europe. We are actually engaging some experts in that area to help move us into the right places. So we don't waste a lot of money doing it. And so that's essentially how we're going to get there.
Okay, good. And you talked again about just logistics and supply chain issues and how they're rippling through the economy? And have you seen any sort of loosening or improvement on that front? Any updated thoughts on that? And I guess also related to that also inflation, I know you implemented some price increases around the time of your last call in the Uniform business.
Do you see the need to do that again going forward? Or just kind of any update on those various macro issues?
We're looking at whether we need to have price increases again or regularly. We wouldn't be the only ones to do so in our industry. We initiated our price increases pretty early to cover ourselves. As I said, we've taken long positions on inventory to try to protect our customers as much as possible so that at least what we have in our pipeline will be at as the lowest cost it could possibly be. It's not going to change the fact that the freight costs, ocean air, everything is more than doubled and in some cases more than tripled.
So the first part of your question, no, we don't see any easing of quite frankly, because we're still in a better position than any of our competitors. We hear about people struggling out there very, very badly. And many of our competitors' customers are reaching out to us. So I'm sure in places where in specific places where we're not servicing our customers up to the level that we'd like to, even though we're being very transparent, we're having constant communications with our customers, not bearing our heads in the sand. And I'm sure there's some of that activity going the other way also.
But as I said in the past, particularly with HPI, they have whatever it is, a 6% or 7% market share. They're still 93% of the market they don't have the share of. And so if more of our competitors' customers are upset than our customers, in the end we win. And that's essentially where we see it. I don't think from everything I read, I don't think we're going to see any easing of this logistical problem this year at all.
And it might be mid next year before it gets resolved. Look, there's not enough ships. People have learned to Internet shop. There's this whole still this capability of ordering something online to your house and having it shipped from Asia. And that's taking up a lot of cargo space now because if it's under $800 it comes into this country and they don't pay duty on it.
So there's a lot of people who have kind of reinvented their own businesses to be able to ship directly from Asia here, but it's taking up a lot more container space in doing so. So I don't see an easing of it. And eventually it will become too expensive for some folks and their customers won't want to pay the bounty that they have to pay to get products. And those people will become hopefully our next prospects and opportunities.
Okay, great. Well, thanks for the update. And then I wanted to lastly ask about you mentioned I think it was Jake that talked about more M and A opportunities bubbling up in the promotional product space. As you look at those opportunities, and you mentioned quite a few inbound calls about potentially combining with BAMKO. As you look at that pipeline, many of those do you think would kind of represent really solid candidates that you'd maybe want to partner with?
I know you try and maintain a high bar when you're looking at opportunities, but just kind of maybe talk about the actual opportunities that you think can arise that would be nice quality opportunities as a result of this challenging environment for competitors?
Yes. Thanks for the question, Kevin. I mean, look, we're looking at acquisitions across all areas of the business, all of our divisions, all of our companies, and each area of the business has opportunities. Certainly, BAMKO has a robust pipeline, but there are opportunities elsewhere as well. And you're right, we have a high bar for what we look for, for acquisitions.
It's got to be accretive to the bottom line, easy to integrate, good for culture, bringing us in the new lines of business, right? And we saw that with gifts by design, if we did earlier this year in Q1, hit all those different targets that we needed in order to be the right acquisition. So we're in discussion with a number of companies, some of which we've been talking to for years. And we've always held, Kevin, that we have to be talking to a lot of different targets in order to find the right ones. And there could be dozens and dozens that we're talking to just to find the right one.
So we're not going to jump at an opportunity just because it presents itself to us. More often than not, people call on us, it's just not the right opportunity. But we're being opportunistic and then you never know when the time is right for some of these. So we're certainly going to keep looking at them as they come in and as we solicit new opportunities.
Okay, that's helpful. Thanks for taking all the questions. I wanted to add my congratulations to Phil and Jake on your new roles.
Thank you so much.
Thank you. Appreciate it.
This concludes our question and answer session. I'd now like to turn the conference back over to Mr. Michael Ben Stott for closing remarks. Please go ahead.
All right.
I'll make this real quick. It's been long for all of you. Thank you very much for joining us today. We're very excited about where our business is at and hope to report to you next quarter continued great results. We'll see you in October.
Conference has now concluded. Thank you for attending today's presentation. You may now disconnect.