Steven Madden - Q2 2023

Transcript

Operator (participant)

Good morning, everyone, and welcome to the Steve Madden Earnings Conference for 2023. I will now turn the call over to Danielle McCoy.

Danielle McCoy (VP of Corporate Development and Investor Relations)

Thanks, Savannah, good morning, everyone. Thank you for joining our second quarter 2023 earnings call and webcast. Before we begin, I'd like to remind you that our remarks that follow, including answers to your questions, contain statements that we believe to be forward-looking statements within the meaning of the Private Securities Litigation Reform Act. These forward-looking statements are subject to risks that could cause actual results to materially differ from those expressed or implied by such forward-looking statements. These risks include, among others, matters that we have described in our press release issued earlier today and filings we make with the SEC. We disclaim any obligation to update these forward-looking statements, which may not be updated until our next quarterly earnings conference call, if at all. The financial results discussed on today's call are on an adjusted basis, unless otherwise noted.

A reconciliation to the most directly comparable GAAP financial measure and other associated disclosures are contained in our earnings release. Joining me on the call today is Edward Rosenfeld, Chairman and Chief Executive Officer; and Zine Mazouzi, Chief Financial Officer. With that, I'll turn the call over to Ed. Ed?

Edward Rosenfeld (CEO)

Thanks, Danielle, and good morning, everyone, and thank you for joining us to review Steve Madden's second quarter 2023 results. As expected, we faced a challenging operating environment in the second quarter. In light of the difficult market conditions, in particular, the cautious approach to orders by many of our wholesale customers in the United States, we were pleased to deliver earnings results in line with expectations for the quarter. While we are never satisfied with financial performance that falls short of what we achieved in the prior year, I'm proud of how our team controlled what we could control in the quarter. As we, one, drove strong gross margin performance despite a promotional retail landscape. Two, managed our inventory with discipline, delivering a 32% reduction in inventory at the end of Q2 compared to the prior year.

Three, controlled expenses and drove cost efficiencies even as we continued to invest in product innovation, consumer engagement, and our long-term growth initiatives. As we move forward, we will remain focused on executing our strategy for long-term growth, the foundation of which is driving closer connections with consumers through the combination of consistently trend-right product assortments and effective consumer engagement, which in turn will enable success with our four key long-term business drivers. One, driving our direct-to-consumer business, led by digital. Two, expanding in categories outside of footwear, like handbags and apparel. Three, growing in international markets. Four, strengthening our core U.S. wholesale footwear business. Now, turning to our performance by channel in Q2. In wholesale, revenue remained under pressure, declining 21% versus the second quarter of 2022.

As expected, our private label business was again a significant drag on the top line, as our mass merchant customers have reduced orders in an effort to right-size overall inventory levels in our categories. Our branded business was also down, though not as dramatically as private label, as our branded customers also continued to take a conservative approach to orders. Despite strong sell-through in several key styles, our wholesale customers did not chase business in those styles the way they normally would, and reorders were significantly lower than we would see in a more typical retail environment. Looking ahead, while our wholesale customers remain cautious, we expect to see significant improvement in the balance of the year relative to the first half.

Even if, similar to spring, we see limited chase business from wholesale customers in fall, we still believe we can be flat or close to flat to last year's wholesale revenue in the back half. In our direct-to-consumer business, revenue in the second quarter declined 5% compared to the same period in the prior year, with decreases in both the brick-and-mortar and e-commerce channels. While consumer demand trends remain choppy, we have seen improvement in the year-over-year revenue performance over the last couple of months as comparisons have eased. We expect to return to year-over-year growth in DTC in the back half. Overall, while we are planning for the operating environment to remain choppy in the near term, we are poised to see significant improvement in our financial performance beginning in Q3.

We knew coming into the year that the first half would be tough, and I'm proud of how our team weathered the storm and excited about our prospects for the balance of the year. Looking out further, I'm confident that with our strong brands, proven business model, and multiple significant growth opportunities, we are well positioned to drive top and bottom line gains for years to come. Now, I'll turn it over to Zine to review our second quarter financial results in more detail and provide our outlook for 2023.

Zine Mazouzi (CFO)

Thanks, Ed, and good morning, everyone. Our consolidated revenue in the second quarter was $445.3 million, a 16.8% decrease compared to the second quarter of 2022. Our wholesale revenue was $314.6 million, down 20.8% compared to the same period in the prior year. As Ed discussed, private label was particularly soft. Wholesale revenue in the branded business declined 13% versus Q2 2022, while revenue in the private label business decreased 40% compared to the same period last year. Wholesale footwear revenue was $234.9 million, a 19.4% decrease from the second quarter of 2022. Wholesale accessories and apparel revenue was $79.7 million, down 24.6% to the same period last year.

In our direct-to-consumer segment, revenue was $128.2 million, decreasing 5.4% compared to the same period last year. On a relative basis, e-commerce outperformed brick-and-mortar, and international outperformed the United States. We ended the quarter with 242 brick-and-mortar retail stores, including 69 outlets, as well as five e-commerce websites and 22 company-operated concessions in international markets. In our licensing segment, royalty income was $2.5 million in the quarter, compared to $2.2 million in Q2 last year. Turning to gross margin. Consolidated gross margin was 42.6% in the quarter, expanding 190 basis points from the same period last year.

Wholesale gross margin was 33.6%, a 200 basis point improvement compared to the same period last year, driven by an improvement in gross margin in the wholesale accessories and apparel business. While wholesale gross margin benefited from mix shift to the branded business, we also drove like-for-like gross margin improvement in both the branded and private label businesses. Direct-to-consumer gross margin was 63.7% versus 66.4% in the comparable period last year, driven by increased promotional activity. Operating expenses in the second quarter were $145.3 million, a 3.6% decrease compared to the second quarter of 2022, reflecting our ability to control costs while continuing to invest in marketing and our other long-term growth initiatives.

Operating income for the quarter was $44.5 million, or 10% of revenue, compared to $67 million, or 12.5% of revenue in the same period last year. Our effective tax rate for the quarter was 23.8%, compared to 23.5% in Q2 of 2022. Finally, net income attributable to Steve Madden, Ltd. for the quarter was $34.9 million, or $0.47 per diluted share, versus $49.8 million or $0.63 per diluted share in the second quarter of 2022. Moving to the balance sheet. Our financial foundation remains very strong, and as of June 30th, 2023, we had $274.4 million of cash, cash equivalents, and short-term investments, and no debt.

Inventory totaled $207.8 million, compared to $306.5 million at the end of the second quarter in 2022, a reduction of $98.7 million or 32.2%. Our CapEx in the quarter was $4 million. During the quarter, we spent $25.8 million on repurchases of the company's common stock, which includes shares acquired through the net settlement of employee stock awards, bringing the total spend on share repurchases to $64.2 million for the first half of 2023. Our board of directors approved a quarterly cash dividend of $0.21 per share. The dividend will be payable on September 25, 2023 to stockholders of record as of the close of business on September 15th, 2023.

Turning to our outlook, we are reiterating our revenue and EPS guidance. We continue to expect revenue for 2023 to decrease 6.5%-8% compared to 2022, and we continue to expect diluted EPS to be in the range of $2.40-$2.50. Now I would like to turn the call over to the operator for questions. Savannah?

Operator (participant)

Is now open for questions. To ask a question at this time, please press star one on your telephone keypad. If at any point you would like to withdraw from the queue, please press star one again. Our first question comes from Aubrey Tianello from BNP. All right.

Aubrey Tianello (Equity Research Analyst)

Morning.

Operator (participant)

The line now open.

Aubrey Tianello (Equity Research Analyst)

Thanks. Good morning. Thanks for taking the question. Wanted to start off first with the revenue guidance. Within the updated guide for revenues to be down 6.5%-8% that you reiterated, just curious what you're embedding there for wholesale and DTC for the year, whether that's changed versus last quarter?

Zine Mazouzi (CFO)

Yeah. For wholesale, we have embedded down low double digits, and for DTC, up low single digits.

Aubrey Tianello (Equity Research Analyst)

Great. Got it. Okay. If I could just follow up on the DTC side. I think in the last call, you mentioned that the DTC was down about 8% in March, and then it was kind of trending similar through April and into May. Just curious how that kind of progressed month-to-month through 2Q, and then so far, what you're seeing into 3Q on DTC.

Edward Rosenfeld (CEO)

Yeah, we did see, we did see DTC revenue trends year-over-year improve as we moved throughout the quarter. They didn't improve quite as much as we had anticipated, and that's why we've adjusted the revenue guidance modestly compared to what we were forecasting last quarter. But we have seen improvement. You know, this month-to-date, or, or excuse me, this quarter-to-date, we're running about flat.

Samuel Poser (Equity Analyst)

Perfect. Thank you.

Operator (participant)

All right, our next question comes from Samuel Poser from Williams Trading Company. Your line is now open.

Samuel Poser (Equity Analyst)

Thank you. Good, good morning. I think that was a record of prepared remarks at 11 minutes, so thank you. A couple of just details, and then I have a broader question. You mentioned-- can you just give us what the international revenue growth was and what the domestic revenue growth was, or decreases?

Edward Rosenfeld (CEO)

Yeah. international grew 4% in the quarter. I don't, I don't have the, the domestic off the top of my head, but, you know, a little bit worse than, than the overall.

Go ahead.

Samuel Poser (Equity Analyst)

Okay.

Edward Rosenfeld (CEO)

What's the next one?

Samuel Poser (Equity Analyst)

You talked about the, you know, you talked about sort of the appetite of the retailers. When we're thinking, you know, things are gonna get less worse, better, as we you're expecting that to happen as we proceed through the year, how can you give us some context into are you expecting it more out of, let say, department stores than you are out of the mass, or your private label versus branded? What kind of a variance was there between the two in the quarter, in the second quarter?

Edward Rosenfeld (CEO)

Sure. Yeah. I think Zine provided the, the branded versus private label and wholesale. Branded was down 13% in the quarter, and private label was down 40% in the quarter on a wholesale basis. Clearly much, you know, much bigger drag from private label. As we go into the back half, I wanna be clear, we're, we're really not assuming any any significant improvement in the overall approach, you know, from the wholesale customers. We still assume that they're cautious. We haven't built in a big chase business in, in Q4, for instance. But really, what you're seeing here, is that we're expecting an improvement compared to the first half, just because of the, you know, the easing comparisons.

The big place where we get much easier comparisons is in private label, because that was, if you'll recall, where we felt the pullback first. So, you know, once we get into Q3, we really anniversary some big declines in that business.

Samuel Poser (Equity Analyst)

Thank you. Then I just wanna verify, you know, you, the, the other pieces, the operating margin, the gross margin that you talked about earlier in the year, at around 43.5% for the gross margin and, operating margin, just over 12% or a little higher. Those numbers, remain in place?

Zine Mazouzi (CFO)

Yeah, for the, Sam, for the gross margin, we revised that down just a little bit to 43, so down about 50 basis points, and just, reflecting a lower mix of DTC, and also some potential pressure and promo pressure in fall that were reflected in our forecast in retail.

Edward Rosenfeld (CEO)

Then for op margin, I would say, close to 12% is what, is, is what we're looking at now.

Samuel Poser (Equity Analyst)

Is that because with the DTC the business being slightly less, the requirement for sort of that support of SG&A there just won't be there to keep it in that range, kind of thing?

Zine Mazouzi (CFO)

Yeah, for, for the SG&A, the assumption that we have is that we'll be at 3% growth dollar against dollars from last year for Q3 and Q4.

Edward Rosenfeld (CEO)

To, but to your point, Sam, yes, we have, you know, given what we've seen, on the top line, and particularly in DTC, we have tightened, tightened our belt a little bit and, you know, we've looked for, for savings wherever we can find them, while obviously not pulling back on, on marketing or other or, or our other, long-term growth initiatives.

Samuel Poser (Equity Analyst)

Thanks. Then, lastly, your inventory levels are, are, are pretty good, are, are clean on a forward basis. How quickly, if somebody came to you, you know, post back to school, because there's gonna be a lot of activity in the next, you know, call it through September 15th, we're gonna see a lot of, you know, a lot of acceleration that could change a lot of outlooks. I mean, if people come to you with orders and, like, by mid-October, you can still respond to holiday even though you're not necessarily expecting that. Is that fair?

Edward Rosenfeld (CEO)

No, mid-October would be late for that, but, you know, the good news is our transit times basically are back to and our lead times overall are basically back to normal. We do have the Mexico capability, and we use Mexico more in fall. So yes, we still, if we, you know, get reads and get customers that are willing to step up, we can still chase into goods for fourth quarter. I wouldn't say all the way until mid-October, but certainly over the next month or two.

Samuel Poser (Equity Analyst)

Nobody's brought up the, the Nordstrom Anniversary Sale. I think we're in it or just past. What have you seen from that?

Edward Rosenfeld (CEO)

Yeah, I think we were pleased with what we saw in the event. The sell-through percentage was, was essentially right in line with what it was a year ago, which I think in this environment is a win. Just as importantly, I think we, you, you know, we got some good reads on early fall product, particularly in the boot and booty category, which is, which is encouraging and gives us confidence going into fall.

Samuel Poser (Equity Analyst)

All right, thanks. Have a good rest of the quarter.

Edward Rosenfeld (CEO)

Thanks, Sam.

Operator (participant)

All right, our next question comes from Laura Champine, Loop Capital. Your line is open.

Laura Champine (Director of Research)

Thanks for taking my question. It's really also about the back half revenue trend, where you expect to see improvement. How much visibility do you have in that? Meaning, is this an improved pre-booking story, or is it more about replenishment? Maybe talk about how that mix works in private label versus branded, since that's driving most of the decline.

Edward Rosenfeld (CEO)

In terms of our wholesale business, look, we've got Q3, you know, 97% or 98% booked. We have essentially almost all of Q3 booked. In Q4, that's probably sitting at just a little bit less than half of Q4 is already booked. As I mentioned, we have not built in an aggressive reorder or chase business into Q4, given, given the behavior of our wholesale customers so far this year. You know, I think all in all, we know quite a lot about where wholesale will fall. There's obviously, you know, still work to do, but, you know, we're tracking towards the numbers that we've, that we've guided to.

You know, to your question about branded versus private label, well, private label obviously books much farther out, so, you know, we know a lot about what the private label business is gonna look like in the back half. Branded is where there's more variance from here based on what reorders and chase does end up looking like.

Laura Champine (Director of Research)

Understood. Thank you.

Edward Rosenfeld (CEO)

Thanks, Laura.

Operator (participant)

Our next question comes from Tom Nikic from Wedbush Securities.

Austin Borina (Analyst)

Hi there. Austin Borina on for Tom Nikic. Just want to get a quick idea about gross margins for the quarter. How much of the improvement in Q2 gross margin was driven by channel mix compared to other factors such as freight product mix? Can you expand upon your comment regarding promotional activity on the full year gross margin guide in the back half?

Zine Mazouzi (CFO)

Yeah. As far as gross margin is concerned, I think it's best to look at it wholesale versus retail. In wholesale, we had a 200 basis points improvement in margin, and a little bit more than half of that was mix related.

Edward Rosenfeld (CEO)

Then in terms of the promo activity, you know, I think, I don't know how much more we can elaborate. We built in a little bit more promo activity into the plan for the back half in DTC.

Austin Borina (Analyst)

All right. Thank you.

Edward Rosenfeld (CEO)

Relatively, relatively, relatively modest change from where we were before. Savannah, next question.

Operator (participant)

All right. Our next question comes from Jay Sole with UBS. Your line is open.

Jay Sole (Managing Director)

Great. Thank you so much. I'm just curious about the sneakers business. You know, there's a lot of talk about excess sneaker inventory in the channel. Is that something that's impacting your, your sneaker business? You know, how much do you expect, you know, sneakers to be a big percentage of the business this year in back to school and holiday?

Edward Rosenfeld (CEO)

Look, it's, it's hard to say, you know, how much we're, we're feeling some of that excess sneaker inventory from the, from the big sneaker players. The sneaker category has been down for us overall over the last few quarters. But we're actually quite optimistic about sneakers going forward. We've got some, some new sneakers that we're delivering that we feel very good about, some very good early reads in that category. We think that we're, we're actually gonna be on the upswing in the fashion sneaker category moving forward.

Jay Sole (Managing Director)

Got it. Then, if you could just talk more broadly about trends. You know, are you seeing, you know, obviously, you know, return to sort of events in 2021 and return to work in 2022. This year, it seems like the trends, it, you know, for the first half of the year, a little bit slower. Are you seeing new fashion trends emerge in the dress side of the business?

Edward Rosenfeld (CEO)

In dress, in dress shoes specifically or or in the business overall? Just wanna make sure.

Jay Sole (Managing Director)

Well, I guess in the business overall. Yeah, the business overall.

Edward Rosenfeld (CEO)

Yeah. Yeah, we are. You know, as I mentioned, we've got some good early reads on things for fall. You know, I, I called out the feeling good about the new sneakers that we're delivering, as well as some, some, some excitement around the boot and bootie category. We don't wanna get, this early in the season, don't wanna get too specific about what those specific trends are. We do see some newness, which we're excited about.

Jay Sole (Managing Director)

Got it. Just last one for me. Just, you know, at the top of the call, you talked about some of the growth initiatives that you're excited about. You know, you continue to-- or it sounds like you're continuing to invest behind those. Can you just maybe rank order or not maybe just list some of the top growth opportunities that you see, whether it's international or, you know, DTC or whatever, just for apparel, just to, you know, remind people what, what you're focused on and what you think is going to drive some nice growth beyond 2023?

Edward Rosenfeld (CEO)

Yeah, absolutely. You know, I think first, the, the one I would put at the top of the list is international. That's been the fastest-growing part of the business over the last few years, and we anticipate that that will be the fastest-growing part of the business over the next few years. We're just really excited about the momentum that we have in, in, in a lot of the markets around the world. Obviously, EMEA has been the, the fastest-growing region for us, and, and, and we think that will probably drive the most growth over the next few years. Excited about what we're seeing in, in other places in the Americas and, and, and in APAC as well. I would say number two is continuing.

You know, we've obviously seen tremendous growth in direct-to-consumer, led by digital over the last few years. Obviously, a little bit of a pullback over the first couple of quarters here, but we still see that as an important growth driver going forward. And, and it's related to the international growth as well, because that business is, is much more penetrated to DTC. We're already about 40% DTC in international, and we see that heading north over the next few years. And then, after that, I would put accessories and apparel. You know, we've got tremendous momentum in Steve Madden handbags. That's been a real bright spot. That business was one of the few businesses that grew for us in Q2.

We're seeing that perform really in all channels, you know, wholesale, DTC, and particularly in international markets as well. You know, longer term, we're obviously, you know, it's early days with apparel, but, but feel very good about the, you know, the start that we're off to there and the opportunity and the runway that we have in that business. That, that's how I would sort of rank the top three growth drivers.

Jay Sole (Managing Director)

Okay, got it. Thank you so much.

Edward Rosenfeld (CEO)

Thanks, Jay.

Operator (participant)

All right. Our next question comes from... Oh, we're actually back with Samuel Poser from Williams Trading, LLC.

Samuel Poser (Equity Analyst)

Just, just a quick one, sorry. Do you have any early reads on back-to-school?

Edward Rosenfeld (CEO)

It's pretty early, Sam. I mean, nothing that I think would be worth calling out at this moment.

Samuel Poser (Equity Analyst)

Thank you again, and have a great day.

Edward Rosenfeld (CEO)

Thanks, Sam.

Operator (participant)

All right. Our next question comes from Corey Tarlowe with Jefferies.

Corey Tarlowe (Senior VP)

Hi, good morning, and thanks for taking my question. I, I just wanted to double-click on the, the handbag commentary that you made. Would be curious to get a little bit more color as to what's really driving the, the growth in that segment, specifically.

Edward Rosenfeld (CEO)

Yeah, I think we've, you know, we've been on a multiyear growth journey here in Steve Madden handbags. We've invested a lot in, in upgrading the product there, and I think we've, you know, we've just made a lot of progress and, and, you know, feel really good about what the design team is delivering in that category, and I think the customer is responding. As I said, you know, what's nice about it is that we're seeing it, you know, really perform across all the different channels and businesses in which we operate, you know, both wholesale and DTC, both domestic and international. It's really Steve Madden handbags that's, that's driving that.

Corey Tarlowe (Senior VP)

Great. Then just to also double-click on apparel, it sounds like that's an area where you see opportunity. What do you anticipate, or how do you expect to continue to execute upon expanding that segment or more profitably growing it ahead?

Edward Rosenfeld (CEO)

Yeah. Well, look, it's, it's, you know, we're, we're, we're just getting started there, but we're off to a very good start. I think the, the spring performance, frankly, exceeded my expectations in terms of sell-through. We're very pleased about the performance we had at some, at key customers like Bloomingdale's, Dillard's, Macy's, et cetera. We feel even better about the fall product. We feel like the fall product is really a significant step up, even from what we had in spring, and is the line that really best represents what, what we want Steve Madden apparel to be. So, you know, we're just getting that out now, but we're really excited about, about what that's going to look like. Look, for us, it always sort of starts with product.

The most important initiative right now is just continuing to make even better product and product that, that more accurately reflects the Steve Madden brand DNA. If we do that, you know, we obviously have the distribution channels to, to, to get that out to, to market and to, and to drive a lot of growth.

Corey Tarlowe (Senior VP)

Great. That's very helpful. Thank you so much, and best of luck.

Edward Rosenfeld (CEO)

Thank you.

Operator (participant)

Our next question comes from Paul, from Citi. Sorry, I just didn't want to butcher your name. Your line is open.

Kelly Crago (Senior Associate Analyst)

Hi, guys. This is Kelly on for Paul. Thanks for taking our question. I just wanted to drill down on the back half sales guidance. Could you talk about 3Q versus 4Q in terms of total sales growth, and then maybe elaborate on how that should look by wholesale versus DTC in 3Q versus 4Q? That's my first question. Thanks.

Edward Rosenfeld (CEO)

Yeah, I, I think that, overall, Q4 should grow a little bit faster than Q3. That's on a consolidated basis. In terms of wholesale, well, that's, that's, and that's primarily driven by, I think, wholesale doing a little bit better, or seeing a little bit better growth in Q4 than in Q3, and, and also the higher mix of DTC in Q4, which we have growing a little faster than wholesale in the back half.

Kelly Crago (Senior Associate Analyst)

Just to, just to clarify that, I mean, on, in the wholesale side of the business, your, your comparison is significantly in the 4Q, but I guess you're saying that you're not gonna see that much of a step-up in growth in 3Q versus 4Q. It's, it's a little bit more consistent than, than what we're looking at on a 1-year comparison basis?

Edward Rosenfeld (CEO)

Yes, and that's because Q4 is, You know, Q3 is more of a sell-in quarter. Q4, more of a reorder and chase quarter, and we've, we've got a, a relatively cautious forecast in there, given how our wholesale customers have been, approaching things.

Kelly Crago (Senior Associate Analyst)

On that, that note, actually, you saw your, your branded wholesale partners really kind of freeze up on the reorders back after you saw the broad consumer slow down in March. I guess, how are those conversations going with, with your retail partners? I mean, are they feeling a little bit better about the business? Is there, is there a feeling that there could be some opportunities to, to chase into products in the back half of the year? How are inventory levels looking for you within, within the retail channel? Thanks.

Edward Rosenfeld (CEO)

Yeah, I mean, I think the answer is: Is there an opportunity that they-- that, that could get better and that they could chase? Yes, but, but in terms of how those conversations are going, we're still... The overall sentiment is still very cautious and the overall approach is still very cautious. That's how we're we've built our, our forecast. In terms of our inventory levels in the channel, though, they're, they're low. We think they're too low. We're certainly encouraging them to step up and get those inventory levels back where they should be.

Kelly Crago (Senior Associate Analyst)

Got it. Just lastly from me, on the, the, the private label, I guess, I mean, I, the private label business is gonna be up in the back half of the year. Is that, is that fair? The brand is still down, maybe similar to the first, first half of the year?

Edward Rosenfeld (CEO)

No, I think both of them will be relatively, relatively similar to what we've said about the overall wholesale, which is flat to, you know, flat or, or close to flat.

Kelly Crago (Senior Associate Analyst)

Got it. Okay. Thank you so much.

Edward Rosenfeld (CEO)

Thank you.

Operator (participant)

All right, we are back with Tom Nikic from Wedbush.

Austin Borina (Analyst)

Hi, guys. Thanks for taking my question again. That's awesome. Just wanted to confirm, you guys are seeing EPS in the back half, like, the slip between Q3 and Q4, similar to how you're seeing revenue for those periods, correct, based on the, the, the wholesale dynamics in the back half?

Edward Rosenfeld (CEO)

I'm not sure I understand the question. Could you-

Austin Borina (Analyst)

like, I guess the thing is, you're not seeing any major, like, SG&A, like, deleverage in, like, Q3 compared to, like, Q4, correct?

Edward Rosenfeld (CEO)

I mean, the SG&A, again, the SG&A growth, I think that, that Zine provided really go, of, you know, is, is about 3%. That really goes for both Q3 and Q4, if that helps.

Austin Borina (Analyst)

Okay, sounds good. Thank you.

Edward Rosenfeld (CEO)

Thanks.

Operator (participant)

All right, if there are no further questions, I will turn the call back over to Edward Rosenfeld.

Edward Rosenfeld (CEO)

Great. Well, thank you, very much for joining us for, for today's call. Enjoy the rest of your summer. We look forward to speaking with you on the next call.

Operator (participant)

This concludes the meeting. You may now disconnect.