e.l.f. Beauty - Earnings Call - Q4 2020

Transcript

Speaker 0

Good day, and welcome to the e. F. Cosmetics Fourth Quarter and Full Year Fiscal twenty twenty Conference Call. All participants will be in listen only mode. Please note this event is being recorded.

I would now like to turn the conference over to Willa McMannan, Vice President of Investor Relations with e. F. Cosmetics. Please go ahead.

Speaker 1

Thank you for joining us today to discuss e. L. F. Beauty's fourth quarter and fiscal twenty twenty results. As a reminder, this call contains forward looking statements that are based on management's expectations, including those relating to the company's efforts to navigate the COVID-nineteen pandemic, category trends, and longer term outlook and are subject to known and unknown risks and uncertainties, and therefore, actual results may differ materially.

Important factors that may cause actual results to differ are detailed in today's press release and the company's SEC filings. In addition, the company's presentation today includes information presented on a non GAAP basis. We refer you to today's press release for a reconciliation of the differences between the non GAAP presentation and the most directly comparable GAAP measures. All comparative net sales figures exclude e. L.

F. Stores. Please note, after the presentation, there's a separate dial in for the QA session also noted in the press release. With me from management today are Tarang Amin, Chairman and Chief Executive Officer and Mandy Fields, Senior Vice President and Chief Financial Officer. Let me turn the webcast over to Tarang.

Speaker 2

Thank you, Willa, good afternoon, everyone. I hope that you're safe and healthy during these challenging times. Today, we will talk about our fiscal twenty twenty results, our response to COVID-nineteen challenges, and our long term investment thesis. Fiscal twenty twenty was a terrific year for e. F.

Beauty. We saw four quarters of net sales expansion culminating in a 16% increase in year over year sales in the fourth quarter. For the full year, net sales of $283,000,000 were up 11%. We expanded gross margin to 64%, up 300 basis points over last year and up 1,700 basis points since 2014. We also delivered adjusted EBITDA of $63,000,000 while almost doubling our investment in marketing and digital.

Our consumption was strong all year and outpaced the category. Of the top five color cosmetics brands in The U. S, we grew the most market share in FY 2020 with 4.8% of the market, up 50 basis points. We also increased our rank in Piper Sandler's teen survey from sixth favorite brand amongst teens last year to fourth this year, reflecting our growing relevance with Gen Z. As I reflect on these results, I believe FY twenty twenty was an important year to reassert our multiple areas of competitive advantage.

We did so by investing in our brand recharge and executing on our five strategic imperatives. We exceeded our key performance indicators and entered COVID-nineteen headwinds with strength relative to the category. Our mission to make the best of beauty accessible to every eye, lip, and face is more important than ever. We believe that our fundamental value equation in digital engagement as well as our world class team's ability to adopt at e. F.

Speed positions us well to weather the COVID-nineteen storm and continue to gain market share. Let me provide a few highlights of the year. Our first strategic imperative is to drive brand demand. E. L.

F. Core advantage centers around the emotional charge generated by our combination of affordability, excellence, and accessibility. In 2020, we kicked off a bold campaign to bring e. L. F.

Superpowers to the forefront of the beauty conversation. Our pride in being 100% vegan and cruelty free, our unique ability to deliver first to mass Holy Grail products that have premium quality at unbelievable prices, and of course our universal appeal. We rolled out our e. F. Amazing campaign across key social platforms, highlighting e.

L. F. Accessible, optimistic and inclusive brand values in a fresh, energetic and modern way. The results of the campaign far exceeded our benchmarks, bringing new consumers to e. L.

F. And accelerating brand advocacy within our existing community. Riding this momentum in October, we launched our groundbreaking eyes, lips, face TikTok hashtag challenge, which started out with an original music track and quickly became the most viral campaign in TikTok US history with over 5,300,000,000 views and over 3,500,000 user generated videos. E. F.

Became a global music sensation as the song generated over 16,000,000 streams outside of TikTok and a number four spot on Spotify's global viral 50 list. Fans desired more, so we partnered with Republic Records to produce a full length eyes, lips, face music video, which garnered over 2,300,000 views on YouTube. In March, to further amplify our presence on TikTok, we launched the eLphia channel, a destination for Gen Z. ELphia delivers customized daily content featuring personalities, products and premium entertainment designed to engage TikTok's rapidly growing audience. Elfie has already amassed over 80,000 followers and 1,500,000 likes.

Our efforts to drive brand demand delivered impressive results. And just this week, our eyes of face TikTok campaign won two prestigious Webby Awards, including the People's Voice Award that honor the best content on the Internet. Year over year Google search trends were up 6%. Our Instagram follower growth was up 22%, and our earned media value was up over 60% for the year.

Speaker 1

So I'm at Ulta right now, and I think what I'm gonna do is I'm just gonna buy makeup that TikTok told me to buy. So let's do it. Do I want this one or do I want this one? I think I'm gonna go with this one.

Speaker 2

We also saw sales spikes in products that went viral on TikTok, including our bite size eyeshadow palettes and existing lip exfoliator and gentle peeling exfoliant. Our second strategic imperative is a major step up in digital. True to our digitally native roots, we continue to lead with a digital first strategy. Elfcosmetics.com, the number one mass cosmetics e commerce site powers our digital ecosystem. In FY 2020, we drove double digit growth in traffic and new consumers to elfcosmetics.com.

Our Beauty Squad loyalty program grew to 1,800,000 members. We also enabled social shopping to connect consumers to a unified social storefront across retailer.coms. Consumption on our retailer.coms and Amazon was up over 50%. We're also delivering Wow Moments, transforming social and further bridging the physical and digital realms. Last quarter, we discussed the launch of our new e.

F. Mobile app, which already has over 60,000 downloads. The app incorporates features such as augmented reality, receipt scanning and access to our recently introduced e. L. F.

Discovery and e. L. F. Cares content hubs. These initiatives are timely.

In the past few weeks, we've seen triple digit growth in sales on elfcosmetics.com and a number of our retailer.coms. Our third imperative of providing first to mass prestige quality products also delivered strong results. During the year, we further strengthened our leading position in primers, brushes and brow, gaining significant market share in these core hero segments. Our Poreless Putty Primer and Camo Concealers also help drive our share in complexion. Our $8 Poreless Putty Primer is the best selling primer in The U.

S. And the number one SKU in the face category. We recently extended these into franchises with the introduction of our Mattifying and Luminous Poreless Putty Primers and Hydrating Camo Concealers and ended the year with share increases in both the primary and concealer categories. Our Liquid Glitter and Bite Size eyeshadows were also well received first to mass introductions later in the year. We continue to focus on skincare as a strategically important category.

Skincare exemplifies our ability to deliver prestige quality at great value. Our Holy Hydration, Cannabis Sativa and Supras lines fueled growth in skincare with sales up 27% in FY 2020. We launched the first full spectrum CBD line in mass this month and have a strong product pipeline in skincare for this fall. Our fourth strategic imperative is driving national retailer productivity and centers around Project Unicorn, our initiative to improve assortment and navigation at shelf. We received three patents during the year for our Unicorn designs, which allow us to better display our products while fitting more items on shelf.

Unicorn has enabled us to elevate our brand presentation and expand our position as the most productive brand in color cosmetics at Target and Walmart. Our consumption at Ulta Beauty and other retailers was also strong for the year. In terms of space expansion, given the strength of our productivity, innovation and consumer engagement, Walmart and Ulta Beauty plan to expand e. F. Space this fall in a subset of their doors.

In our international business, we had mixed results. We've been winding down business with certain distributors in favor of shifting to a more direct relationship with key beauty accounts. This weighed on our results with overall international down 4%. We remain confident that international represents major white space and that our brand resonates. We had a great year in The UK with strong growth on elfcosmetics.com, Superdrug and Boots.

We're also excited about expanding our global digital footprint with a particular focus on China and The EU. Our fifth imperative is cost savings to help fuel brand investments. Our biggest cost savings initiative to date was closing our 22 e. F. Stores in February 2019.

We successfully redeployed the 13,700,000 of savings from e. L. F. Stores to our digital and national retailer business. In FY 2020, we also took pricing up on approximately one third of our SKUs, which along with cost savings and favorable FX more than offset tariffs on China goods.

We are particularly pleased with our pricing execution. Recall, this was the biggest pricing action that we've taken in our sixteen year history. Our approach worked well. We targeted SKUs that we believed offered the strongest value or where the leading competitor SKU would likely also face tariffs. Not only did many competitors follow our price increases, but we're able to maintain our value, which is more important than ever in an uncertain economy.

Our new liquid fill manufacturing plant in California is set to start up in July. This is delayed by one quarter due to the impact of COVID-nineteen. Our new U. S. Plant provides us further supply diversification while also significantly reducing lead times.

We also continue to strengthen our China operations advantage using lean techniques. I'm particularly proud of our China team. We were one of the first beauty companies to be fully operational in China when COVID-nineteen restrictions were lifted. Thanks to the strict health protocols and dedication of our team and suppliers, our team has remained healthy. The progress in our five strategic imperatives has been terrific and we have further opportunity with each.

We're equally excited about our progress on strategic extensions. We strongly believe there's an opportunity for significant value creation, leveraging the investments we've made in our team and infrastructure for other brands, both acquisitions and brands that we create. Our first strategic extension was the acquisition three months ago of the pioneering clean beauty brand, Well People. This acquisition was strategically important as consumers are becoming increasingly conscious of the ingredients in their products and clean is one of the fastest growing segments within beauty. Our thesis is that we can benefit from the twelve year history Well People has as a pioneer in clean beauty with 40 EWG verified products and in turn leverage the investments we've made in our team and infrastructure to scale Well People.

We've fully integrated this acquisition onto the e. F. Platform, realizing synergies and making progress on growth initiatives. We're receiving incredibly positive feedback from our national retail partners where Well People is more productive than many other clean beauty brands. Additionally, we have identified supply chain synergies and are working with vendors for efficiencies.

In the coming months, we plan to launch a Well People brand recharge as we did for e. F. In addition to acquisitions, our team has been working to create a new brand for calendar year 2021 that I look forward to discussing during our August call. We believe strategic extensions are key to our long term growth as we evolve from a single brand to a multi brand beauty company. As I will outline later, we have a number of competitive advantages that we plan to leverage to scale fast growing emerging brands and consumer segments.

Though we are in the early days of this journey, the Well People integration and the progress developing a new brand gives me confidence that we have the right roadmap for growth. Before I turn the call over to Mandy, let me update you on our response to COVID-nineteen. Similar to other companies in our space, we've seen COVID-nineteen negatively impact consumer behavior and significantly reduce cosmetics and skincare category sales. So far, while our business is down, we are faring better than the categories in which we compete and are taking market share. We believe we're better positioned than other brands to come out of this given our value proposition and digital strength.

Our team has taken a number of decisive actions in response to COVID-nineteen. Our first priority is the safety and well-being of our employees and consumer community. I am proud of our employees and the resilience they're showing as we navigate this crisis. I already mentioned the incredible efforts of our China team and suppliers to be one of the first beauty companies fully operational coming out of COVID-nineteen in China. We've taken many of the same protocols we used in China for our U.

S. Employees. We sent safety kits with gloves, hand sanitizers and disinfectant wipes to all employees and provided assistance with other needs. We have an extremely talented team and we are determined to protect as many jobs as possible during this time. E.

F. Is also caring for our consumer community. We reached out to our community through donations to food banks, mental health organizations, and healthcare workers. Drawing on the success of our original TikTok hashtag challenge, we remixed eyeslipface into a new eyeslipface safe public service announcement to raise awareness of basic preventive measures we can all take to help stop the spread of the virus. Nearly 10,000 videos were created using Eyes Lips Face Safe, garnering close to 4,000,000 likes and over 23,000 shares on TikTok alone.

We also manufactured hand sanitizer that we've shared with our team and partners and are shipping for a limited time with every order on elfcosmetics.com. Our focus will always be on our community and I'm proud of our efforts to get through this together. We know that strong financial discipline is needed to weather this challenging period. We amended our credit agreement to provide greater flexibility and access $20,000,000 of our $50,000,000 revolver giving us $65,000,000 in cash on hand. We're also tightly managing inventory, receivables and capital expenditures.

We're reducing expenses and scaling back marketing digital investments in proportion to net sales. Similarly, we've gone after costs in short term merchandising and operational savings. At the same time, we are keeping the long term in mind, investing in our digital footprint across the European Union and China. We're also continuing to develop Well People and a new brand to ensure that we have a healthy portfolio of brands for the future. In summary, we are moving at e.

F. Speed to respond to the current retail environment and position ourselves to continue to gain market share. I believe that our digital strength and core value proposition will enable us to outpace the category in this uncertain economy. I'll now turn the call over to Mandy to discuss the financials.

Speaker 3

Thank you, Turing, and thank you for joining us this afternoon. Today, I'll cover our strong fiscal twenty twenty results, discuss in more detail the financial actions we're taking in the COVID-nineteen environment and share what we are currently seeing in our longer term perspective. I'm quite pleased with our Q4 and overall fiscal twenty twenty results. As Tarang mentioned earlier, we drove positive net sales growth in every quarter, wrapping up the year with a positive 16% in Q4. The focus on our strategic imperatives allowed us to invest significantly behind our brand, drive top line growth and deliver adjusted EBITDA slightly ahead of prior year.

We delivered net sales of $283,000,000 in fiscal twenty twenty, up 11% from year ago. This growth outpaced the large legacy brands in our space and was fueled by disciplined execution against our strategic imperatives. Gross margin of 64% was up 300 basis points compared to prior year. I am particularly proud of the progress we made here. Recall this time last year, there was concern over gross margin given 25% tariffs being implemented on the majority of our COGS.

Not only did we overcome tariff headwinds, but we continued our gross margin progression through a combination of cost savings, margin accretive mix, the price increases we implemented last July and the one time benefit of favorable FX rates. On an adjusted basis, SG and A as a percentage of sales was 49% compared to 45% last year, primarily driven by increased investment in our marketing and digital initiatives, which increased from 7% in fiscal twenty nineteen to 13% in fiscal twenty twenty. The increase in rate was also driven by funding bonus accrual and investments in merchandising programs. This was partially offset by not operating our stores in fiscal twenty twenty. Recall, closing our stores was a strategic move to allow us to invest more behind the brand via marketing and digital.

Fiscal twenty twenty adjusted EBITDA of $63,000,000 came in at 22% of net sales and slightly ahead of last year even after funding the investments we made throughout the year. Adjusted net income was $32,000,000 or $0.63 per diluted share compared to $33,000,000 or $0.66 per diluted share a year ago. The change in adjusted net income was driven by higher depreciation in fiscal twenty twenty and a change in adjusted EPS was further driven by increased share count. In fiscal twenty twenty, we generated $44,000,000 in cash flow from operations driven by our strong operating results. The increased cash flow enabled us to fund the $26,000,000 acquisition of Well People and approximately $8,000,000 in share repurchases.

Even with these investments, our March 31 cash balance was $46,000,000 compared to a cash balance of $54,000,000 a year ago. Fiscal twenty twenty was a fantastic year overall and provided us with momentum for fiscal twenty twenty one until COVID-nineteen impacted all aspects of our lives, consumer behavior and category trends. Let me talk a bit about what we've seen so far and how we're navigating the COVID environment. Going into the COVID-nineteen crisis, our consumption was strong with e. F.

Track channel sales up 13% for the four weeks ending February 22. Nielsen data for the initial COVID period for the four weeks ending April 18 showed our consumption declined to 29%. More recently, the four week period through May 2 showed e. F. Track channel sales down nine percent.

We believe the improvement in recent weeks has been driven by the one time impact of government stimulus checks. Net consumption data has been all over the map. Outside of track channels, we are seeing strong results on elfcosmetics.com and through our retailer.coms. Ulta Beauty store closures and softness internationally has however almost fully offset the e commerce benefit. Over the next several months, we believe there will be volatility in the category and in our sales performance.

Given this volatility, we will not provide fiscal twenty twenty one guidance today. It is simply too challenging to predict the entire year with the overhang of COVID-nineteen. Tarang already outlined the principles guiding our COVID-nineteen response plans. I will touch on each of these and the work we've done over the last few weeks. Protecting our people is at the top of our list.

As we believe we have built the strongest team in beauty. We plan to protect as many jobs as possible and are looking at other areas of cost savings which I will outline shortly. In caring for our consumers, we funded most of these efforts out of our fiscal twenty twenty marketing budgets. We are proud of the charitable donations we were able to make to help our communities during this unprecedented time. On the liquidity front, we have worked with our banks to ensure we have additional financial flexibility.

We have a strong liquidity position with approximately $65,000,000 in cash on hand and access to an additional $30,000,000 undrawn on our revolving credit facility. In April, we amended our credit agreement, modifying our covenant levels to reduce the minimum fixed charge coverage ratio and increase the maximum permitted total net leverage ratio through June 2021. This allows us to weather significant declines in adjusted EBITDA without triggering covenants. Details of our credit agreement amendment can be found in the eight ks filed on April 9. Also as Tarang mentioned, we are tightly managing inventory, receivables and capital expenditures to further fortify our balance sheet.

We've reduced our planned inventory levels by $10,000,000 and our planned capital expenditures by over a $1,000,000 through September. On the expense front, we are taking steps to reduce where we can while still investing in our long term growth. In the short term, we're reducing marketing expenses to better match spend with the sales decline, pushing on operation savings, holding headcount open and scouring the balance of the P and L for non essential spend. This has been a significant effort with the team cutting over $15,000,000 expenses from our operating plan for the first half of the year. While this does not translate directly to reductions on a year over year basis, it does demonstrate the major effort the organization has made to ensure we're containing costs in this environment.

Given the decline in sales we're anticipating for the next several months, we expect adjusted SG and A to delever versus prior year. In summary, as we face the headwinds of COVID-nineteen, we expect net sales trends to be volatile, similar to what you may see in track channels over the next several months. While we are actively cutting expenses from our operating plan, given the timing of COVID-nineteen restrictions and plans already in motion, most of our year over year expense reductions will not begin to take shape until Q2. We expect our liquidity to remain strong even in this declining sales environment. Last quarter prior to COVID-nineteen, I discussed our three year outlook with the expectation for growth.

Recall, we have presented two scenarios. The first reflects a low to mid single digit net sales CAGR, which assumes no significant shelf space or strategic extensions. The second scenario reflects a mid to high single digit net sales CAGR that is inclusive of significant shelf space and integrating strategic extensions over time. In both cases, we anticipate adjusted EBITDA leverage will be achieved through a mix of top line growth and annual cost savings and COGS and or SG and A. While the short term is uncertain and requires us to push the model out, we still believe in our long term algorithm once the retail environment returns to normalcy.

We believe our value proposition positions the e. F. Brand for growth. And with the addition of Well People and the new brand we're developing, we anticipate that growth can be further accelerated. With that, I'll turn the presentation back to Terrain.

Speaker 2

Thank you, Mandy. Before I open up the call to questions, I'd like to underscore that e. F. Delivered outstanding FY twenty twenty results and we believe is better positioned than many of our competitors to navigate this challenging time given our strength in digital and strong value equation. Our confidence in the long term growth and investment thesis is based on our unique advantages.

We have the right team with an employee base that's 70% female, 55% millennial and 45% diverse and represents the consumers that we serve. We hire from Blue Chip Academy beauty and consumer companies with people who want to move at e. F. Speed. We're one of only 10 public companies with a board that is over 60% female.

Our board is highly experienced in public company governance. We know our consumers and how to engage them with our number one mass e commerce site and reach on key digital platforms. We know how to make products people want with a unique ability to launch holy grail first to mass products. We move at e. F.

Speed with the ability to bring new products to market in as few as thirteen weeks. We have world class operations providing us the best combination of cost, quality and speed. We know how to go to market and grow through strong relationships with our national retail partners. We've expanded our shelf space from 11,000 to 110,000 linear feet in the last five years. We have significant opportunities in both additional space and geographies.

We know how to build brands as we move from a single brand company to a house of brands. While these are difficult times, we are optimistic in the long term potential of this company. We believe our digital strength and core value proposition will enable us to gain market share in the short term. We continue to have a great deal of white space and are confident to be able to return to our long term economic model once this crisis is over. In summary, we're optimistic in the long term potential of this company.

Not only do we deliver an outstanding FY 2020, I believe we're better positioned than most companies in our space to navigate these challenging times. Our mission to make the best of beauty accessible to every eye, lip and face is more important than ever. I am so grateful to our team, our partners and the consumers that we serve. We look forward to seeing you virtually at the upcoming William Blair, Jefferies, Piper and Cowen conferences where various members of our executive team will provide further color on how we are navigating these times and plan to build upon the advantages that made FY twenty such a success. We continue to have a great deal of white space and are confident to be able to return to our long term economic model once this crisis is over.

Thank you. With that, operator, you may open the call to questions. For those who'd like to ask a question, please do so through a separate dial in line at (866) 807-9684 or (412) 317-5415 internationally. Those not asking questions can hear the question and answer session through the webcast. With that, we will pause for five minutes for those seeking to ask questions to queue up on the dial in line.

Speaker 0

We will now begin the question and answer session. The first question comes from Andrea Teixeira of JPMorgan. Please go ahead.

Speaker 4

Thank you, and I hope all is well. Tarang and team, congrats on the results and the new presentation format and the visuals. If you can help us understand what's happening quarter to date. You're relatively doing better, and obviously, appreciate Mandy's analysis of the Nielsen data. But my first question is if the shipments are now shaping how they're shaping up now quarter to date, if they're less negative in May than in April?

And if you see the inventory levels at the bricks and mortar now that some states are reopening, how you're seeing those inventory levels? And my second question is just a clarification on Mindy's point about the deleveraging operational deleveraging. Is that a commentary just for the first half of the year that despite the efforts to reduce $15,000,000 I believe it was the commentary on SG and A that we're still going to see SG and A the operating deleverage on the EBIT level? Thank you very much.

Speaker 5

Hi, Andrea. So nice to hear from you. So on the quarter to date, what we have going on, as I disclosed on the Nielsen data, we have seen things tick up a bit since the 04/18 read. So in the 04/18 read of Nielsen, we were down 29%. In the latest four weeks ending 5.2, we were down 9%.

And we really feel that, that has been driven by the impact of government stimulus checks hitting those consumers and they're out there spending. And so what I would say is that I can't give you any color on our shipments quarter to date, but I can anchor you back to the Nielsen data we're seeing. And again, that the latest four weeks ending fivetwo, we do think was a onetime event related to consumers government stimulus checks. In terms of the deleveraging, so the way that I'm approaching this year, given the volatility that we're seeing, as I'm really focused on the first half of the year. And so the $15,000,000 in cost reductions that I spoke about, that was versus our operating plan.

I would say on a year over year basis, we are still expecting SG and A adjusted SG and A to deleverage versus a year ago, given the magnitude of the sales declines that we're seeing.

Speaker 4

Very helpful. Thank you so much. I'll pass it on.

Speaker 0

No problem. The next question comes from Dare Mohsenian of Morgan Stanley. Please go ahead.

Speaker 6

Hey, good morning guys. Hope all is well.

Speaker 7

Good morning.

Speaker 6

Tarang, obviously significant cosmetics category weakness in The U. S. Mass channel recently. Can you just give us a bit of a conceptual overview of when you might expect to see a more sustained rebound in U. S.

Mass cosmetics trends? What's the driver behind that? Is it more people returning to work or feeling comfortable shopping the shelves? Or is it more consumers' comfort with their financial situation? I'd assume it's more the latter, but you did mention the temporary boost with the stimulus checks.

So just curious for what might be the drivers behind that? And then secondly, can you just discuss the potential for consumers to trade down into the mass beauty category for more premium products with macro weakness and elf's ability to potentially capitalize on that? Thanks.

Speaker 7

Good afternoon. I would say on the first question in terms of what the outlook would be, it's one of the reasons we suspended 2021 guidance. Things are just too volatile right now. As Mandy said, the four weeks ending April 18, we saw pretty significant declines in the category and in e. F.

And so one of the things we're really paying close attention to is what we're seeing from a consumer behavior standpoint. Certainly in the last few weeks, we've seen a major uptick. Again, we believe that's due to stimulus checks and as well as some parts of the country starting to open up. So I would say the things we're focused on is when do we turn to some level of normalcy, whether that's people coming back to work, ability to go into retail stores once they're done with and I think we're starting to see the initial hoarding on essential products, particularly with the stimulus checks. I think we saw both Walmart and Target talk about their discretionary spending going up.

So we're paying close attention to what happens with that consumer behavior. But I do believe it will factor into both the normalcy of getting people back to their normal lives as well as the amount of unemployment that is out there. In terms of us and what we're seeing in the category, we believe we're well positioned. So even in that period in mid April where the category is particularly soft, we picked up pretty significant share. Our share in that four weeks ending $4.18 was a 5.2 share, up 60 basis points versus year ago.

We continue to see good share results and it's one of the things that we're really focused on is our relative performance to the category. And I would tell you that we're well positioned, not only the strength that we have in digital, but our overall value proposition. We know over the last few years as the economy was booming, there certainly was trade up into prestige. We believe our ability to provide prestige quality products with these extraordinary values positions us really well. So we're looking forward to continue to take share as we go forward.

Speaker 6

Great. Thanks.

Speaker 0

The next question today comes from Oliver Chen of Cowen. Please go ahead.

Speaker 8

Hi, Teriang and Mandy. Our question is about thinking about the crisis and what are permanent changes and or surprises that you see as you approach marketing and or product development? We'd also love your take on how you're going to prioritize thinking about being multi brand and there's a lot of opportunity ahead. So what are some of the thoughts around frameworks about what you should focus on next as you embark in that part of your strategy as well? Thank you.

Speaker 7

Sure. Hi, Oliver. I would say in terms of core changes we're seeing, our first focus is always on people and I'm incredibly proud of our team and our ability to navigate so far this crisis Starts with our China team. We've been dealing with this since January as they were impacted by COVID-nineteen in China. I'm proud that we're one of the first beauty companies come out of the crisis there.

I think within a week all of our suppliers were up and running within five weeks we're at 100 capacity. And that really went to the regimen that our team took from a health and hygiene standpoint level of coordination we have really talks a lot about our advantages. We're taking many of those same tactics S. To take care of our employees and our communities first and foremost.

In terms of within particular categories that we take a look at, we've had strength really for a very long time in primers. We saw that get even stronger in this past year with our Poreless Putty Primer, which we've now made a franchise with the introduction of our Luminous and Mattifying Putty Primers. Poreless Putty Primers now not only the number one primer in The U. S, but the number one face product. And we've also gotten some anecdotal notes that have been great to see, came from a number of nurses who said, the only thing they could kind of put on their faces as they wore all the masks and didn't want to soil them was our Poreless Putty Primer and really helped save their face.

And so we continue to see strength there. We see strength in concealers and then particularly in skincare. Skincare was strong all year. The consumption data was plus 27% for FY 2020 and that doesn't even include Ulta Beauty, which expanded skincare full chain. So we'll continue to see a focus on skincare.

I'm particularly pleased with some of the more recent introductions, both our cannabis sativa line, as well as our full spectrum CBD line that we launched just couple of weeks ago. I think there's a real desire from consumers for wellness and we're positioned well again with our skincare offering prestige quality at these extraordinary prices. And I'd say the third thing that really focused digital. We've long as a digitally native brand that's been key focus of drives everything that we do from a consumer engagement standpoint. But as I mentioned in the last few weeks, we've seen triple digit increases on elfcosmetics.com as well as many of our retailer.coms.

And I believe you'll continue to see increased emphasis on digital. And then on the second question regarding multi brand, we've long believed that the investments we've made in the team and infrastructure and the capabilities we have could be applied to other brands and a significant leverage in being able to do that. I'm really pleased with the integration that we've had with our Well People acquisition. Within three months, we fully integrated it into all of our health systems operationally, as well as starting to map out the growth path on Well People. It's a great example of being able to take something that has a lot of potential that can leverage the e.

F. Chassis that we have. I'm equally excited about a new brand that we've been developing for some time that we'll be able to talk about more in the August time frame. Similar type of approach of being able to leverage a chassis that we've built, whether it be in an adjacent category or different price points that again can leverage the investments we've made in team and infrastructure.

Speaker 8

Thanks, Teri. Our last question is just Target and Walmart have done a great job with curbside pickup and the drive up curbside experiencing as well as rethinking stores and the age of social distancing is becoming a big topic. Does that have implications for how you think about planning and or where you are with Project Unicorn? Project Unicorn sounds like it's been really successful and you've had a lot of momentum there.

Speaker 7

Yes, we've been really pleased with what we've seen at both Target and Walmart on their buy online pickup curbside. Those businesses are particularly strong for us and I believe other brands as well. I think what it relates to is also our efforts on the retailer.com front. We've seen pretty strong growth all year, not only on the different retailer.coms, but also Amazon. So I think it's a continuation of a trend we've been seeing, which is more comfort online and being able to leverage the physical spaces that retailers have.

And then as that relates to Unicorn, you're going hear me talk about Unicorn for many quarters to come, because it's got multiple phases and we continue to drive improvements in productivity through Unicorn. And that includes our ability to do better visual merchandising and how we do that both online and then when it comes into their stores, as well as what we think about a new reality of when they're navigating even the websites of our customers is also another dimension that we'll be looking at with Unicorn.

Speaker 8

Great. Nice job on Chipotle. Best regards.

Speaker 9

Thanks. Thanks, Oliver.

Speaker 0

Next question today comes from Steph Wissink of Jefferies. Please go ahead.

Speaker 9

Thanks. Good day, everyone. We have a two part question on skincare. Trane, you just started talking about it in response to the prior question, but I'm curious if you can just contextualize for us a bit more how big is skin as a percentage of your total business? And can you help us think about how big at retail versus some of your more advanced channels like yourown.com or maybe even Ulta as a specialty partner?

Speaker 7

Sure. Hi, Steph. So skincare has been a pretty big strategic focus of ours for some time going back, let's say at least eighteen months. Part of that reflects what we've seen from a category standpoint and the ability for it to really drive incremental sales. But more importantly, it follows our model really well, where we see some of the best products on the prestige side and our ability to make those more accessible to consumers.

So it's still a small part of our business. It's still less than 10% of our total business, but it's one of the fastest growing parts of our business. And I think you'll continue to see it grow fast, mainly because of the innovation pipeline that we can bring. The example I gave on a full spectrum cannabis sativa line that I mean, sorry, spectrum CBD line that we just introduced is a good indication of our capabilities in terms of bringing real innovation and news in skincare and having it be more accessible. And then in terms of footprint, I would say skincare has tremendous white space.

The most developed customer that we have from a skincare standpoint is Target. Ulta only started rolling it out full chain last year and we've seen great results with both customers on our skincare. They making up an increasingly large portion of our business there or larger portion of our business. It's still a small portion of our overall business. And then I'd say the thing that gives me the greatest heart for skincare and what its potential is, is it's significantly larger portion of our online sales.

So where we're able to have the full assortment, which tells me that over time as more retailers take in skincare from e. F. And allocate more space to skincare, it can be a much bigger part of our business.

Speaker 9

That's great. And then just one follow-up on your marketing strategy as we progress into the back half of this year and think about potentially more of a recessionary environment. I know you've not leaned very heavily into price as an agent for driving awareness and utilization. But is that an opportunity lever that you see to really press into your value proposition in addition to your other advantages? Thank you.

Speaker 7

Absolutely. I think our value proposition is one of our core superpowers and in this environment particular, we're seeing consumers really respond to those messages. So we're already we're not staying quiet during this time. We think it's a great opportunity for us to build share. We have taken marketing down relative to our original plans, but it's still proportionate to net sales.

And that's because we want to keep the fuel on in terms of our engagement efforts, which have been quite successful. And as part of those engagement efforts, we're constantly testing and learning different approaches. What we've seen over the past number of weeks is some of our value messaging that we've done digitally have been consumers have been quite responsive to, they've done really well. So I think you're going to continue to see us really hone that area of our advantage and find different ways of communicating it. You won't have to wait till

Speaker 10

Thank the back

Speaker 9

you very much.

Speaker 0

The next question today comes from Erinn Murphy of Piper Sandler. Please go ahead.

Speaker 11

Great. Thanks. Good afternoon. I guess my first question is for you, Tarang. I'm curious, you talked about kind of space gains secured for Walmart and Target in a portion of their doors.

Could you just kind of elaborate a little bit more about when we should be expecting those? Maybe what percent of the fleets, respectively, are getting them? Is this kind of a pre holiday or kind of spring reset plan?

Speaker 7

Sure. Hi, Erin. So we're really pleased that with the strength that we saw throughout FY 2020, particularly on the productivity front, the strength of our innovation program and our consumer profile, retailers continue to reward us with more space. So as I mentioned in our prepared remarks, both Walmart and Ulta will be expanding e. F.

Space in a subset of their doors. It will be the time it will be this fall. So it won't have to wait till next spring's planograms and that's the current kind of timeline that they're on. For competitive reasons neither customer likes us to reveal what that footprint will look like. So you'll have to unfortunately wait till the fall to see it in their stores.

We believe there's still plenty of white space even in our most established customer Target last year as part of the Unicorn us developing these flex towers with them that allow us to highlight some of our key innovation and most productive items proved to be almost a mini space gain within Target and we're taking those merchandising vehicles that we're seeing across customers and particularly in this environment, maybe related to the previous question on really highlighting our price value equation and the price statements we can make, really looking at that as an opportunity with the additional space to really make those statements.

Speaker 11

Okay, that's helpful. And then I guess I recognize retailers have been prioritizing, particularly you look at Walmart and Target kind of the essentials in this initial phase of the pandemic. But as we sit now and you're seeing more retail open, how are your key retailers talking about replenishment? Are they starting to look at replenishment yet? And the reason I ask is, as we walk stores, it definitely feels like for your brand and some of several of the cosmetic brands, there's a lot of stock outs right now.

So I'm just curious on when you kind of expect that to potentially change?

Speaker 7

Well, as you say, for sure, the retailers were prioritizing essentials, particularly in that initial period we had such unprecedented demand for essential products. We've always run fairly lean when it comes to an inventory standpoint with our retailers. We're in very close contact with them. We've penetrated the supply chains pretty well with each of our retailers and are working closely them to make sure that we have better in stock positions going forward and pretty confident of our ability to do that given our history.

Speaker 11

And just to clarify, are the retailers starting to replenish the category?

Speaker 7

They've always replenished it. Think part of it has to do with relative performance. As I mentioned, while the category was way down and we were to particularly during that point with stimulus checks, we performed extremely relative to the category. So it's what we've seen in the past because e. F.

Moves much faster because we have this great value equation. Consumers are buying more of it, which creates the need for replenishment. But we've been replenishing. We ship every week to each of our major customers. And so I would expect that to catch up in short order.

Okay.

Speaker 11

And then Mandy, sorry, I do have one more for you. You guys have done a nice job seeing a strong gross margin acceleration, particularly this last year at a 64% level. Can you just kind of share with us what are some of the key kind of puts and takes from here, particularly as you think about the next twelve months? Thank you.

Speaker 5

Yes. So hi, Erin. We are not giving guidance today and that would pertain to gross margin as well. But what I can tell you is that we have done a great job of offsetting the impact of tariffs through a mix of pricing, our margin accretive innovation, cost savings and of course, the onetime benefits that we're seeing with foreign exchange. And that's what I can tell you.

We've made great progress there, and we've been able to not only maintain, but improve our gross margin, in fiscal twenty twenty, and we're really proud of that.

Speaker 11

Thank you.

Speaker 0

The next question comes from Rupesh Parikh of Oppenheimer. Please go ahead.

Speaker 10

Good afternoon. Thanks for taking my questions. So I guess a question for you, Terron. Just want to get a sense in terms of how you're thinking about demand for makeup in this environment, especially more people working from home and people going out less in public areas?

Speaker 7

Well, we certainly, particularly in initial period saw the category decline, consumer behavior changed where you did not need to wear makeup as much when you're just at home. And so certainly there was destruction from a demand standpoint in the initial periods. More recently, we've seen an uptick. I think it'll be some time before we know whether how much of that was due to the stimulus checks that were out there versus consumers frankly being maybe a little pent up and wanting to get back to their lives and normalcy. We also are with each of our retailers pulling data for different regions of the country of when people are able to kind of get back and restrictions are lifted.

And we do see better results in those markets where restrictions have been lifted. But again, the long term impact of this, I think we're going to have to continue to monitor over time.

Speaker 10

Great. And then I guess just one more question. As you look at the competitive backdrop out there, some of these smaller brands have definitely made traction in makeup the past few years. Like how are you thinking of the backdrop coming out of this? Like does it get less competitive, maybe there's less money going into some these smaller brands?

Just any thoughts there would be helpful.

Speaker 7

Yes, I started my career in beauty almost thirty years ago and I used to tell people then it's a highly competitive category and I haven't seen anything change other that competitive rivalry increasing, particularly when brands can go direct to consumer online, including the Genesis and the formation of e. F. That way. What I will also tell you though is very few brands have scaled above that $100,000,000 mark. And so you will constantly see a flow of brands come in and out.

In that context, I feel we're very well positioned. I think not only did we grow the most share of the top five brands last year in FY 2020, but even in this initial period in COVID-nineteen, I think we're the only brand growing share out of those top brands. And so I believe as long as we continue to execute our strategic imperatives and we put real focus on our leveraging what we call our superpowers, I think we're well situated in the market.

Speaker 10

Great. Thank you.

Speaker 0

The next question comes from Bill Chappell of SunTrust. Please go ahead.

Speaker 12

Thanks. Good afternoon. Hope you all are well.

Speaker 7

Good afternoon. Two

Speaker 12

questions. One, how good of a visibility do you have into the pantries of your customers? And then when I say that, I mean, has have sales tracked kind of usage or is it hard to tell? And when I say that, I assume a fair amount of your consumers as they've stayed at home, they've used less cosmetics because they're not going out, they're not going to the store, they're not doing whatever. And as things open back up, they will.

But I don't know if your sales over the past two, three months have tracked that or if there's been pantry loading and then deloading or how you look at those past few months and then as things open up?

Speaker 7

Yes. So I'd tell you first of all, Bill, that we don't have great visibility in terms of the pantries. And part of that has to do with a loyal cosmetics consumer will have a number of different brands and many products, particularly the core enthusiasts. There's no such thing as enough makeup. And so while the short term we have seen behavior change because it's being sheltered at home, we believe when people are able to return to more normal lifestyle, we'll see good consumption there.

I think the other things that we pay really close attention where we do have really good data is on elfcosmetics.com and with all the initiatives we've had there. And what we're seeing is very strong response right now. And so I think this will be a matter of when does retail fully really open up to change kind of the overall dynamic, but we're seeing quite a bit on elfcosmetics.com and if anything all of the metrics are higher. The number of new users coming to our site, the level of not only traffic, but our conversion, even our average order values are really quite something right now and gives me hope in terms of what we'll see later.

Speaker 12

But I guess just to follow-up into that, do you expect a pickup as states or are you seeing in some states that are further along? As you know, I'm in Georgia, we're opening a little bit faster than some people would like. Do you seeing faster sales as people are getting back out in those states? Or is it hard to tell?

Speaker 7

We are we do track stores where restrictions have been lifted and the sales are better in those. Now what the long term impact is, is there another wave that comes, what happens there. Also one of the reasons why we're not prepared to give guidance at this point, but what I would tell you is, you definitely can see once restrictions are lifted, you do see a pretty significant uptick.

Speaker 12

Got it. And then just one follow-up and Mandy, you may not answer this, but you have the two plans in any given year, one with shelf space gains, one with less shelf space gains. Could you tell us what you were thinking the plan was going to be pre COVID based on what you've said about Walmart, Ulta and shelf space gains?

Speaker 5

Yes. Just Bill, I will answer that question. So we were before we got into COVID, if you recall the chart that we just showed here, we were up 13% for the four weeks ending February 22. So we had a lot of momentum coming into fiscal twenty twenty one. And so I tell you, we probably would have been at that higher end scenario with the shelf space gains, with the strategic extension of Well People and the we just announced a new brand, but that will be more so calendar 2021.

But we had a lot of momentum as we came in. And so we were feeling good about that second scenario.

Speaker 12

Great. That's very helpful. Thanks so much. Stay safe.

Speaker 5

Thank you.

Speaker 0

The next question comes from Linda Bolton Weiser of D. A. Davidson. Please go ahead.

Speaker 13

Hi, thanks. Can you talk about a little bit more about Target and they've redone their beauty section and reorganized it and kind of come up with a new format. Can you talk about whether all their stores have converted yet to the new format and also what it means for you? Like does it literally convert over to the same amount of linear footage? Or does it modify things just by the format?

Or can you talk a little bit more about that? Thanks.

Speaker 7

Sure. Hi, Linda. As far as target goes, it's about 1,800 doors. And I would say we probably draw up north of 30 different planograms for them depending on their different formats. So they don't have any one standard.

They do have a I think and I always get the names wrong, but I think it's called Beauty Blowout concept, which is their best expression of beauty. We tend to have more space in those beauty blowout stores. And as you convert more of those stores to beauty blowout, we tend to pick up more space because they just have a bigger amount of this footprint dedicated to beauty in those stores with elevated presentation. And so we've been in those beauty blowout stores as they continue to roll those out. We get enhanced presence in those stores.

And then I'd say in the balance, is not only our longest standing partner, but it's where we have the greatest presence. And so even if it's not a beauty blowout store, brand does quite well, because they've been able to supplement the space they have, whether it be things like our flex towers or other merchandising that we do with e. F. So we have a pretty strong presence chain wide regardless of the format.

Speaker 13

Thanks. And then also can I ask you about your viewpoint toward M and A currently because it seems like you're going ahead with the launch of a new brand organically? So does that mean you would also consider during this timeframe additional M and A? And do you think opportunities are being created given the crisis? Thanks.

Speaker 7

Sure. So I'd say our first focus is the e. F. Brand and the tremendous potential we have on e. L.

F. And best evidenced by the five strategic imperatives that we've executed against. And you'll continue to see us do that particularly in the short term. I'd say our second priority is the other brands we already have. So the integration of Well People now that that's been integrated, really the growth thesis that we had is time of acquisition.

We believe there's a great deal of white space on Well People. And I'm really excited and hope to be able to talk to you in August about the new brand that we've organically created and that is also really exciting. So I'd say, for short term, we have our hands full and are fully dedicated to realizing potential of all three of those brands with our team. I'd say longer term, there certainly are going to be opportunities in this marketplace. There's going be some brands that can benefit from the platform that we've created that we can also see a strong growth thesis to.

Of course, it's premature to talk about that given our current focus, but I'm hoping both valuations come down and are more reasonably and that there are good opportunities in the future.

Speaker 13

Great. Thank you and good luck with everything.

Speaker 7

Thanks.

Speaker 0

The next question comes from Jon Andersen of William Blair. Please go ahead.

Speaker 14

Hi. Good afternoon, Trey and Mandy. Hope you're well.

Speaker 5

Thanks. Thank you.

Speaker 14

Wanted to follow-up on kind of the last question. You've talked a lot about building a multi brand platform. And I don't want to ask about any specific M and A or internal efforts. Obviously, there's more news to come on that. But Chiang, if you look out three years or five years, whatever the horizon, and you think about the business as a multi brand platform, how many businesses or brands are we talking about?

Are there some guardrails in terms of the sheer number of categories, the brands that you feel can be optimally managed by the company? And then is there some size criteria as well? Are you committed to fewer brands perhaps with more size and scale to support investments in innovation and marketing? Or are you open to kind of a portfolio with a longer tail? I know there's a lot there, but just kind of bigger picture, some guardrails around this.

Thanks.

Speaker 7

Sure. So John, maybe building on my last point, the best opportunity we have is with the e. F. Brand and continue to realize its full potential. And so that will clearly be our main focus.

Having said that, we have an incredibly talented team and a set of capabilities that can be applied to other brands. And so we look forward to proving that out both with Well People as well as the brand that we're currently in development on. I'd say we do not have any magic number of how many brands do we portfolio. In terms of guardrails, we'll continue to be highly disciplined from a financial standpoint. If you think about it, we've had this pursue strategic extensions as part of our strategy for a few years and it wasn't it was only three months ago that we did our first strategic extension and we feel really great about the brand that we're developing organically from a financial perspective that's much more attractive, but also in terms of where what it's looking at.

I'd say the second point for me would be the criteria is things that can both leverage our platform as well as exhibit really strong growth. And so that is probably the bigger guideposts than any particular size of what we're looking for or number of brands that we're looking for. And so I believe what you'll see us do over the next least couple of quarters is further flesh out. Let me tell you about our plans on Well People. Let me tell you about this new brand and why we're really excited in calendar twenty twenty one.

That's not to say we wouldn't look at or pursue other M and A if it made sense, particularly in this environment, there may be things that look attractive, but that's really our current focus.

Speaker 14

That's really helpful. Thanks. Last one for me, international, it sounds like The UK was quite strong, maybe other international markets less What's happening there maybe in some of the markets that aren't haven't been quite as strong? What are you doing to kind of return that business to growth?

Speaker 7

Sure. So international still represents major white space for us. And I'd say, we've been on this journey probably longer than a year now, probably the last couple of years, where if you looked at our international footprint two years ago, it was primarily comprised of distributor relationships in a variety of different markets around the world. And what we realized is a number of those distributors either couldn't scale to the extent that we needed in the scale or we didn't have the level of control that we wanted to have in that market. And so we tried something very different with The UK that's proven to be quite successful, which is direct headquarters coverage.

So we started by taking away the distributor that had our website in The UK and basically brought in house elfcosmetics.com in The UK. Direct relationships with both Superdrug and Boots, we've seen incredibly strong growth in The UK. So that's our model going forward. That's not to say we won't have some distributors in certain markets. But what you saw in international was us continue this journey of pulling business away from distributors in favor of our own direct coverage.

And probably the two best countries of that are represented would be Canada, which is where our first start was where we go direct to Walmart and other leading retailers there and The UK. And you'll see us take that model to other countries. We've been talking about testing the brand in Germany as we go forward. We talked last call in terms of our potential in China, particularly on e commerce. And on this call, I just mentioned our focused area of The EU from an e commerce standpoint.

So getting that direct coverage and direct control both in our own website as well as key leading beauty retailer is really the focus going forward. And I feel really great about that strategy because that's what we've actually used here in The U. S. And it's also a more profitable model as you cut out the distributor margin. You can also have a better value equation in any of those particular markets.

Speaker 14

Thank you.

Speaker 0

The next question comes from Mark Astrachan of Stifel. Please go ahead.

Speaker 15

Yes, thanks and afternoon everyone. I guess just first question on online. I'm curious to the extent that you want to talk about it, what percent of sales we're at right now in terms of your website, otherretailer.com, etcetera, just all sales coming from that channel, given obviously what's going on in the world and presumably a permanent shift to more online and buy online pickup in store, etcetera. And just could you remind us or update us on kind of where your market share is online versus offline, please?

Speaker 5

Yes. So I'll take that one, Mark. So overall, our digital business is approximately 11% of our total sales, and that was for fiscal twenty twenty. As we've talked about, seeing in recent weeks, our own e commerce, our retailer.coms really ramp up. That percentage has accelerated, but, 11% is where

Speaker 11

we were for fiscal twenty twenty.

Speaker 15

How do you think about market share online versus offline?

Speaker 7

It's really hard to measure. Where we do get some indication is through some of our retail partners, but they don't share all of their category data. Certainly know what we do in elfcosmetics.com. I would say the summary point there is it's going to be a continued area of focus and we believe we have a set of capabilities that make us a great partner with even retailer.coms as well as Amazon. So I think you'd see as a proportion of our business, our hope would be our digital business will go higher.

And I'd say the other thing I'd tell you is, it even less than the commerce part of it is the engine that drives everything else. Our entire consumer engagement model is 100% digitally oriented elfcosmetics.com and a lot of the investments we've made behind it is, it is the central hub of our consumer engagement activities. And if you particularly if you go on our new app, which already has 60,000 downloads, I think it gives you a good indication of where we're going both in terms of kind of the virtual makeup, try ons, the receipt scanning, which allows us to combine all of our customer data in one place, our loyalty program. And then our more recent content hubs, whether it be the e. F.

Discovery Hub or the e. L. F. Cares Hub gives you a real good view of how we're using that to not only drive our e commerce sales, but more importantly our overall sales as a company.

Speaker 15

Got it. Okay. And then just lastly, not trying to steal thunder from more commentary about the new brand launch upcoming, maybe just talk a bit about how you think about where this is put on shelf? Is it existing retailers? Is it something, for example, that those existing retailers may have come to you and say we see an opportunity more upmarket, as you kind of alluded to, and therefore, there's kind of an ease of ability to get shelf space and just sort of how you think about it being potentially complementary to what you're already doing with your existing retailer footprint?

Speaker 7

Yes. So we see it highly complementary. Certainly, our approach will be to leverage our strong relationships with our existing retailers, our capabilities online and the rest of the chassis I talked about particularly on our strength operationally is the best combination of cost, quality and speed. But it is going to be complementary to e. F.

So most likely start in a different category, start with different price points. And when we're able to announce it, I think it will be a lot clearer than my hypothetical discussions right now. And so look forward hopefully in the August call where we could give you much greater color on that, but it's something that we're tremendously excited about. And part of that excitement comes being able to leverage the tremendous talent we have as our team and our capabilities and really be able to apply to create something special.

Speaker 15

Okay. Thank you.

Speaker 0

This concludes our question and answer session. I would like to turn the conference back over to Tarang Amin for any closing remarks.

Speaker 7

Great. Well, thank you everyone. I really appreciate the time today. I hope everyone stays safe and healthy and navigate these challenging times we're in. I remain confident in our ability to continue to gain market share, thanks to the talent we have as a team, our digital strength, as well as overall value proposition and look forward to updating you hopefully when things return more to normal.

Thanks everyone.

Speaker 0

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.