ZUMZ - NASDAQ

Good afternoon, ladies and gentlemen. Welcome to the

Hello, everyone, and thanks for joining us on the call. With me today is Chris Work, our Chief Financial Officer. I'll begin today's call with a few remarks about the third quarter and the start to the holiday season before handing the call over to Chris, who will take you through the financials and some thoughts on the rest of the year. After that, we'll open the call to your questions. Our performance in the third quarter came in slightly ahead of our expectations as the year-over-year sales trends continued to improve compared with the first and second quarters. Given that the operating environment remained challenging, particularly in the U.S., causing our customers to be more selective about when and where they spend their money, we are encouraged by our results during the key weeks of the back-to-school selling season. At the same time, we were not surprised that our sales trends pulled back somewhat during the second half of Q3. As we move beyond the peak back-to-school season. The industry has been volatile all year, marked by muted peaks and deeper valleys as inflationary impacts continued to weigh on discretionary spending combined with increased competition for wallet share from spending on services and experiences. Higher promotional activity to clear elevated inventory levels across our retail sector has added to the headwinds pressuring our full price selling model. In response to this backdrop, we've continued to adjust our merchandise mix and brand assortments to bring newness to our offering as well as more value through private label brands to support our diverse customer base. These adjustments speak to the strength of our model and our ability to adjust both across departments and from branded to private label products to meet customer demand all while ensuring we are providing our customer with a world-class service and differentiated shopping experience to expect when visiting

Thanks, Rick, and good afternoon, everyone. I'm going to start with a review of our third quarter results. I'll then provide an update on our fourth quarter-to-date sales trends before providing some perspective on how we're thinking about the full year. Third quarter net sales were $216.3 million, down 8.9% from $237.6 million in the third quarter of 2022. Comparable sales were down 9.2% for the quarter. The decrease in sales was primarily driven by North America and Australia business, offset by more favorable results in Europe. During the quarter, we continued to see softer sales, primarily driven by ongoing inflationary pressures on the consumer, a shift in spending to travel and experiences and softer demand for full-price key styles and trends in North America. From a regional perspective, North America net sales were $181.6 million, a decrease of 12% from 2022. Other international net sales, which consist of Europe and Australia, were $34.8 million, up 11.1% from last year. Excluding the impact of foreign currency translation, North America net sales decreased 11.9% and other international net sales increased 5.2% compared to 2022. Comparable sales for North America were down 10.7%. Comparable sales for other international were down 0.3% for the quarter. From a category perspective, all categories were down in comparable sales from the prior year during the quarter, with footwear being our most negative, followed by women's, accessories, hardgoods and our best-performing category men's. The men's category was down only low single digits in comparable sales during the quarter, reflecting the continued positive brand and fashion trends we talked about on our Q2 call as we were heading into the back-to-school season. We are excited to see some of the newer brands resonating with customers, and we'll look to build on these trends in the holiday season. Net sales included a decrease in transactions and an increase in dollars per transaction. Dollars per transaction were up for the quarter, driven by an increase in average unit retail and an increase in units per transaction. Third quarter gross profit was $73.2 million compared to $82 million in the third quarter of last year. Gross profit as a percentage of sales was 33.8% for the quarter compared with 34.5% in the third quarter of 2022. The 70 basis point decrease in gross margin was primarily driven by lower sales in the quarter, causing deleverage on our fixed costs. The key areas driving the change were as follows: Store occupancy costs deleveraged by 120 basis points on lower sales volumes. Product margins decreased by 50 basis points, 20 basis points decrease related to web fulfillment costs and a 10 basis point decrease related to deleverage in our buying group. These negative impacts to gross margin were partially offset by a benefit of 70 basis points in web shipping costs, 50 basis points improvement in distribution center costs. And a 20 basis point reduction in ambulatory shrinkage. SG&A expense was $73.4 million or 33.9% of net sales in the third quarter compared to $71.5 million or 30.1% of net sales a year ago. The 380 basis point increase in SG&A expenses as a percent of net sales was driven by the following: 160 basis point increase due to both deleverage of store wages on lower sales as well as increases in wage rates that could not be offset by hours reductions, 110 basis points of deleverage in nonstore wages, 80 basis points of deleverage in nonwage store operating costs. And 30 basis points of deleverage in our other corporate costs. Operating loss in the third quarter of 2023 was $0.2 million or 0.1% of net sales compared with operating profit of $10.4 million or 4.4% of net sales last year. Net loss in the third quarter was $2.2 million or $0.12 per diluted share. This compares to net income of $6.9 million or $0.36 per diluted share for the third quarter of 2022. We will have a modest tax expense in the quarter despite our pretax operating loss due to the distribution of pretax income across our different tax jurisdictions. This compares to a more normalized effective tax rate of 27.9% in the third quarter last year. Turning to the balance sheet. The business ended the quarter in a strong financial position. We had cash and current marketable securities of $135.8 million as of October 28, 2023, compared to $141.1 million as of October 29, 2022. The $5.3 million decrease in cash and current marketable securities over the trailing 12 months was driven primarily by capital expenditures, partially offset by cash flow from operations. As of October 28, 2023, we have no debt on the balance sheet. We ended the quarter with $175.9 million in inventory, down 0.7% compared with $177.2 million last year. On a constant currency basis, our inventory levels were down 2.3% from last year. This includes high single-digit inventory declines in the North America business, our most challenged market. Now to our fourth quarter-to-date results. Total sales for the 31-day period ended November 28, 2023, decreased 4.6% compared to the same 31-day period in the prior year ended November 29, 2022. Comparable sales for the 31-day period ended November 28, 2023, were down 6% from the comparable period in the prior year. From a regional perspective, net sales for our North America business for the 31-day period ended November 28, 2023, decreased 7.3% over the same period last year, with comparable sales over the prior - over the period, down 6.8%. Meanwhile, our other international business increased 6.2% versus last year, with comparable sales over the same period, decreasing 3.2%. Excluding the impact of foreign currency translation, North America net sales decreased 7.2% and other international net sales increased 1.5% compared with 2022. From a category perspective, the men's category had positive comparable sales fourth quarter to date, while all other categories were down in comparable sales from the prior year. Hardgoods was our most negative category, followed by women's, accessories and footwear. We are excited about the trends that are emerging in both the men's and footwear categories. Men's was positive low single digits quarter-to-date while footwear was down low single digits after being our most negative category during the third quarter. The quarter-to-date comparable sales decline was driven by a decrease in transactions, partially offset by an increase in dollars per transaction. Dollars per transaction were up, driven by an increase in units per transaction, partially offset by a modest decrease in average unit retail. With respect to our outlook, I want to remind everyone that formulating our guidance involves some inherent uncertainty and complexity in estimating sales, product margin and earnings growth given the variety of internal and external factors that impact our performance. Our fourth quarter-to-date results have continued to show incremental progress through the trends experienced in the first three quarters of the year. But are still trending below prior year levels as consumer demand remains under pressure from the continued impact of high inflation on discretionary spending. With that in mind, we are planning total sales for the fourth quarter to be between $275 million and $281 million, including the 53rd week. We expect that our fourth quarter 2023 product margins will be down roughly 110 basis points from the fourth quarter of fiscal 2022. Due to both geographic sales mix across our businesses as well as promotional cadence to move through inventory. Consolidated operating profit as a percent of sales for the fourth quarter is expected to be between 1.5% and 2.5%, resulted in diluted earnings per share of roughly $0.24 to $0.34 for the quarter. As a reminder, our guidance is inclusive of the 53rd week, which is a benefit to sales and earnings in the fourth quarter of fiscal 2023. And a detriment to sales and earnings growth rates in fiscal 2024. Now I want to give you a few updated thoughts on how fourth quarter guidance rolls into our full year fiscal 2023 results. Inclusive of our fourth quarter guidance, we anticipate that total sales will be down in the 8.7% to 9.3% range in fiscal 2023 compared to 2022. Product margins were down 50 basis points in fiscal 2022 after six consecutive years of growth. Through the first nine months of 2023, product margins were down 60 basis points from the prior year. A portion of this year-to-date decrease has been driven by our international businesses, which have lower product margins increasing as a percentage of total sales. Inclusive of our fourth quarter guidance, we now expect annual product margins to be down approximately 85 basis points due to both the geographic sales mix across our businesses as well as promotional cadence to move through inventory. Our model is sensitive to sales fluctuations. We have seen deleverage in sales declines across fiscal 2022 and into 2023. While the opposite was true in 2021 when we experienced record sales and operating margin driven by meaningful leverage. We continue to diligently manage expenses as we navigate the current environment. And are positioned to take advantage when conditions improve. For fiscal 2023, we currently anticipate that operating margin will be between negative 2.9% and negative 3.2%. And our loss per share will be roughly $1.16 to $1.26. We currently expect that our pretax earnings for the year will be negative. And that we will have modest tax expense due to the distribution of earnings across our different tax jurisdictions. It is important to note that the income levels with income levels down at our current guidance levels changes in the jurisdictional income mix can cause our effective tax rate to fluctuate significantly. We are planning to open 19 new stores during the year, including five stores in North America, 10 stores in Europe and four stores in Australia. We expect capital expenditures for the full 2023 fiscal year to be between $20 million and $21 million compared to $26 million in 2022. We expect that depreciation and amortization, excluding noncash lease expense, will be approximately $22 million. We are currently projecting our share count for the full year to be approximately 19.3 million shares. And with that, operator, we'd like to open the call for your questions.

[Operator Instructions] Our first question comes from the line of Mitch Kummetz of Seaport. Your line is open.

Yes. Thanks for taking my questions. Chris, you mentioned footwear, some positive inflection there in terms of the trend worse category in 3Q, and it's gotten a lot better in early 4Q. Can you elaborate on that? And I noticed online you got some promos going called footwear frenzy with some pretty big markdowns. So I'm kind of curious like is the sequential comp improvement, is that markdown driven? Or is it better trend in footwear, better inventory availability and footwear, what can you say about kind of the positive inflection there?

Sure, Mitch. Yes, I'll take the question and then let Rick add anything he'd like to add. From a footwear perspective, we are happy with the trend line that we've seen in the fourth quarter. We talked about footwear a lot as we move through the year. In fact, even in our first and second quarter calls, highlighting that it was one of the more challenged areas from an inventory perspective. We have with the downturn in our sales trends, we've taken the management of inventory pretty seriously and really try to manage inventory carefully, especially so we don't have future markdowns. Footwear has been one of the areas that that's been most challenging and probably one of the areas that we've carried a little more inventory than we'd like with the sales downturn throughout 2023. What I'm happy to report with the fourth quarter is that a large part of that improvement in the trend line is actually driven by new product and full price product that pretty excited about, right? We've been testing a lot of things in footwear, and we've seen some things work as we've transitioned into November and we're able to receive some of our new receipts. That being said, there is a portion to of that trend line that is tied to the continued movement to try to move old age. And so it's a combination of both, but a fair amount driven by full price selling, which again is really our strategy when we look at how to navigate through the cycle we're in is that we want to be not just in footwear, but across all our categories and departments full price, full margin, and that's what we're really trying to push.

And I would just add, Mitch, to Chris' comments that - we hope that we are finding bottom on some of what have been a multiyear trend on some of our brands being negative and our footwear brands. And as Chris said, too, I think we're also hoping that on our markdown cadence over the next few weeks, we can find the bottom in that cycle, too. And then it is really exciting. I think they're both a brand and some trends that are driving footwear up. And the last thing I would - that as Chris said, new and full margin kind of business. And the last thing I'd say that I think we get encouraged about is footwear cycles in general are experiences that tend to be longer cycles than some. So if we can get moving to the right direction, find the bottom with the brands that have been holding us back a bit, we have some good trends and brands going the other direction that I think we may have a longer - have a good run with the footwear cycle in front of us.

All right. Appreciate that color. And then I guess my follow-up question. On Europe, can you speak a little bit to what you're seeing from a macro standpoint there? And remind us what your exposure is to snow in Blue Tomato and how you see that sort of shaping up early in the season. And I know it was too difficult or too pretty bad snow seasons the last couple of years. So I don't know what an easy comparison means for that business?

Yes. I'll start with kind of the macro and then let Chris address this snow question, Mitch. And Europe, from an inflation perspective, it still has been a little bit more challenged than the U.S. We've seen more progress with declining rates here, although just - I think they just announced today, we're seeing some inflation deceleration in Europe. But there are still some challenges there undoubtedly. We also know that there's some lagging the way statutory pay rates take place in Europe. So we have to work our way through that. But we're hoping that with the statutory rates that get mostly updated at the beginning of the year with declining rates, we'll see more disposable income in consumers' pockets than this last year. We're kind of working in the opposite direction. So - but as a very competitive market. I guess that's the other thing I'd say is we're seeing just as much price-driven promotion over there. as we do here in the U.S. So it's a very competitive marketplace. And I think our performance on a relative basis shows that we're actually gaining share in the market. So - and then lastly, from a macro perspective, of course, we still - there's still the uncertainty of the War in Ukraine, which is may have faded to some people's background, but I'll tell you, it's definitely more in the front of the Europeans thinking than it probably is in other parts of the world at this point. So I think we are hopeful that we'll find some benefit on the macro perspective. I think it may be unique to us. There's a lot of the bigger players that are running losses in Europe. So I'm hopeful that as we move into next year, we - the combination of statutory rates and declining inflation may be a net positive for us.

Yes. And just from a numbers perspective on snow and maybe more important on the business overall, Europe's been one of the stronger parts of our business here moving across the first nine months of the year. They were up 12% with a strong mid-single-digit comp here within that 12%. So it's not just new units, it's seeing strong comp. We have transitioned obviously, into the fourth quarter and in our November results to date, we did talk about Europe being much softer than what that 9-month trend line is. And a lot of it comes to question. We have not seen a strong start to snow. And so that at this point in the year, doesn't mean that the whole season shot, we certainly have a lot of probably the peak weeks of buying still ahead of us across December and into January. And I would also mention, while I'm not going to release our snow numbers or snow plan to date, we'll recap more of that here in March. This is an area of the business that we're excited about because we're core and it's key to what we're doing. The other piece of it is how much we've diversified a diversified across - Europe. So as we have moved into areas like Northern Germany and other markets, we have less of a dependency on snow. So that's a big push of ours and something we work through. As far as Europe, with the snow mix, it over-indexes in October. It over indexes in January because of that dependency on snow. The rest of the months generally is sort of in line because of our peaks here we have around holidays. So we're obviously hopeful for cold weather. I think we're well positioned to take advantage of it if it comes. But that has been part of our slower results here in November.

All right, thanks again and good luck for the holiday.

Thanks.

Thank you. One moment please. Our next question comes from the line of Jeff Sinderen of B. Riley. Your line is open.

Hello. This is Richard Magnusen in for Jeff Van Sinderen. Thank you for taking our call. Can you speak more about how you are positioned with inventory versus holiday last year and also touch on planned promotional cadence this year versus last year? And then maybe what trends you are seeing in the digital business since Black Friday weekend?

Sure. Okay. Let me take a crack at it here. I mean, from an overall inventory perspective, as we said on the call, inventories were down 0.7%, down 2.3% on a constant currency basis. So - if we just step into that, I think we feel pretty good about where overall inventories are, Breaking that down a little bit further. You would find the North America inventory, which is really our toughest market has been down in like the high single-digit area. So we feel really good about how that's lining up in relation to where sales are. So a lot of our inventory growth is international based, which, again, is more tied to units. And, to a lesser extent, some of the landing of products. So I think from an overall inventory perspective, we feel good about where we're at. From a promotional perspective, we did, obviously, foreshadowing our guidance that we were expecting to be more promotional than we were a year ago, which I think is a factor of a couple of things. One, the markets incredibly promotional, and we know that, that consumer, our consumer is squeezed, right, with the inflation and some of the things the more macro environmental things that are happening to them, and so we are trying to move and be in a spot to work with that customer. That does not mean to us 30% off the entire store, where we're definitely very passionate about how - what our brands mean to us and how we work with our brands to really push through a full price full margin. What it means is we have to find areas of value and ways that we work with that value consumer in this type of market. So we do have a promotional cadence, as you would expect, that we've planned coming into the holiday, which is a factor both of how do we reach the customer and how do we look at areas of old age because our goal, like it is for all of our quarters and holiday seasons, particularly is in the year in a pretty good inventory position. So we're focused on that from a promotional cadence I think you see some of that in, I think Mitch mentioned in the earlier the footwear frenzy, but we've got some different promotions out there that we're working through. And then lastly, from a digital perspective, what I would say is we are continuing to see a strong demand of our customer to be in stores. We're seeing a good mix of our customer coming to stores, the digital business overall for the third quarter was basically just a little bit better than our overall result, but we continue to see really strong store results. Our Black Friday was a really great day for us. It's positive in stores. We know that our customer wants that physical experience. And our web has been a little bit softer than the trend line. So I think we'll roll it all up and talk about that more on the quarter. I think the other piece that's unique to us. And you see this, I believe, when you're on our website, is we're really trying to drive the customer to store. So you'll see it even that digital customer, we're showing them what's available in our store. We're encouraging them to come pick it up in store, driving them to that availability because we believe over the long term, it's great to get them in front of our sales teams. It's great to get them in our store environment where they can experience everything we have to have - everything we have and not just what they're seeing on the pages.

All right. Thank you. Can you update us to what extent you can on plans for store count in FY '24? And maybe speak to what sort of terms you're seeing on lease renewals in any new store locations?

Sure. I'm not going to give exact numbers for 2024. That's normally part of our March call. What I would tell you is we're trying to be really smart with our store growth. Last year, we opened 32 stores, which I think are - we feel really good about the locations and the economics of the deal. Obviously, our sales have been down over that time frame. So we continue to believe long term, these will be good locations for us. They have not opened as strong as we would have hoped. But I think that's probably more of a macro thing. This year, we reduced that from 32 to 19 stores, I think we feel very similar. I think from a lease rate perspective, we are seeing a more optimal lease expense. We just have to be able to drive that top line. I think we'll take those learnings and factor them into 2024. The other piece of this type of environment, this type of market, like a lot of retailers. We're looking at the overall store population for some potential closures. As we all know, there are certain malls and locations across the country that are more challenged than others. And so that's something that we're spending some time looking through. Again, I'm not going speak the exact numbers because we have some work to do. But what I can tell you is we've got a detailed process to look at store closures. We really focus on the 4-wall economics of the location its impact on trade area, it's impact on digital and then what's happening in that current environment? Is the mall long for the trade area? Are there other malls that might - we might see the volume transitioning too? Or is this a permanent decline or a temporary decline. So we're asking ourselves a lot of those questions right now within our plan, we have about 15 store closures within our current modeling. I will tell you that's a number that could increase or decrease depending on how we move through the year and how we're able to work through our teams and with our landlord partners. And so - we're focused on really trying to bring the best

All right, thank you very much. That helps. I’ll get back into queue.

Okay.

[Operator Instructions] Our next question comes from the line of Mantero Moreno-Cheek from Jefferies. Your line is open.

Hello. Thanks for taking my call today. I just wanted to know if you could provide more color about what trends are working for men's and how are they - how are they differing internationally versus the U.S. And then any early reads on holiday trends that were very strong during the Black Friday season? Thank you.

All right. Let me start. And again, we're not going to typically talk about brands, in particular or specific trends for a lot of reasons, competitive things. I think we have some things that are clearly to our advantage. But I think what I'd like to just comment a bit on is the - and why - and particularly your question why men's is so much better. I think what you're really seeing is it reflects the strength of our core consumer. And we are disproportionately a men's retailer. And I think through these challenging times when people are stressed with high inflation, have less discretionary income or wallet share shifting towards services and experiences, it makes our business really tough. And one of the things I think that - we think a lot about is our core consumer intact. And I have to tell you, I think we - a lot of our sales loss over the last two years is tied to trend consumers and to declining brands that reach broadly into the trend market and outside of our core market. So when we look at our core consumer, which is predominantly male, this is why the men's business is better. And we can see this in a number of different ways in the business. One is the strength of our business in the emerging brands launched in '22 and '23. We're seeing really good - we're seeing those brands work well resonate with these consumers on the men's side. And it's encouraging for us, I think, to see that, and they're running ahead of pace for where we think they would be in a normal brand maturation cycle for these classes of emerging brands. So that also reflects what our core customer wants, that uniqueness newness in the marketplace that you can only get at

Yes. I'll talk a little bit about private label and then just catch on the holiday trends. Part of your question. I mean, from an overall private label perspective, as Rick mentioned, that value message has been extremely positive. We have seen private label increase about 500 basis points as a percent of sales. Looking at this year, year-to-date through nine months as compared to nine months last year. So really seeing that business do well. And I think it resonates with what the consumer wants. And it's one of the interesting pieces, as Rick mentioned, just between how brands and private label have moved across the years here. I mean we've seen private label reach into the 20% before in the middle part of the last decade. We saw a drop as low as about 11% or 12% at the end of the decade, and we're back in that 20% range. So it's really interesting to see how it's moved, but been pretty popular with our consumer thus far. From an overall holiday trends perspective, what's interesting about November and what we continue to see in the business is it's very similar to what we saw on back-to-school, where we saw the real strength of the business around the peaks, and we were not alone. I think other retailers were talking about how it got a little slower after back-to-school. So we saw that as we move past and out of the back-to-school season. And then as we moved into this quarter, weeks one and two November, were our tougher week. We definitely saw softer volumes there, getting a little bit better moving into the Thanksgiving week and then that week four of November was our strongest week we were roughly flat in total sales. So I think that's a good sign in regards to what we should expect over the next few weeks as you would imagine, as we lay this out by week and maybe more importantly, by day, those days and week, that week ahead of Christmas will be very strong with Christmas hitting on a Monday. So our forecast, our guidance is obviously pretty in line with what our trend rate is if you exclude the 53rd week, and we would expect that week before Christmas and even a week after Christmas to be the strongest weeks of the remaining weeks left for us.

Thank you. And best of luck with the holiday season.

Appreciate it. Thanks.

Thank you. One moment please. We have a follow-up question from Mitch Kummetz. Your line is open.

Yes, thanks for taking our follow-up. Rick, I just wanted to ask you about skate hardgoods, maybe kind of philosophical question, I don't know. But when I reflect on that business over the last 10-plus years, most recently, we had COVID that kind of drove a lot of demand before that. It was maybe penny board before that, it was long boards. At this point, it looks like that business is probably going to be at its lowest level of penetration in a long time, if not the last 20 years. Have we gotten down to kind of just the core kids that skate that are buying components. And is that a pretty consistent business? Like is that where you think skate is right now? And like if that's the case, does that mean like we could be getting close to a bottom there?

I appreciate the question, Mitch. And it's a good question. Skate is while it's not our - anywhere closest to our biggest department, it's an important department for kind of the essence of what we're about. And it's also, I think, the young skate kid continues to kind of lead that young person, both male and female, who like the lead on trend. And so that's particularly why I think that customer is so important to us. And so I get - I'll add a little bit more color to what you said because as you know well, right, we had a huge state run up in the first part of the 2010 running all the way up there. We had the big long board trend that got boomed up there, and then it all collapsed in '15 and '16. And then we had some fallow years. And then literally in February '19, the skate cycle took off every war for us around the globe. We couldn't even actually pin down what it was. But we had a huge year in skate hardgoods in 2019. We're up about close to 50% over 2018 and 2019. And then with the pandemic, much like with bikes, I think we move demand for skate hard goods forward. And I think this did accelerate the women's participation in skateboarding. But I think a lot of demand got moved forward, and we ran up close to another 50% gain in 2020. Then even with the stimulus spending in 2021, which, as we all know, was gigantic for our business, and we ran up 20-plus percent in 2021, skate hardgoods declined. And that reflects the nature of, I think, what you're talking about, Mitch, the impact of the pandemic on skate hardgoods. And you layer all of that over the fact that I think we own more share than ever in the skate hardgoods world in the specialty retail world of skate hardgoods. I think we own the biggest share that there is out there today. And we peaked at our highest share, I think it was in 2020, Chris ?

Yes. At 19%.

19% of sales. That we never got close to that, but that speaks again to the demand pull forward that happened during the pandemic. Now today, and I think we're going to forecast this year, I won't give you the exact percentage, but I do think that as we forecast the decline with a decline in '21 despite stimulus decline in '22 in '23, which have been significant and I think even outsized for our sales declines. I think we're very close to - as you're suggesting, Mitch, the lowest penetration may be an all-time low. In skate hardgoods as penetration of our mix. Now that said, finding the bottom will be really good here because we don't have to drag right, of the big declines we've taken over the last three years. So finding the bottom, there's just flat a benefit in that. But our experience is that we'll probably bounce along the bottom for a couple of years before we see it next - for 12, 18, 24 months before we see the next upcycle would be what our experience skate hardgoods would tell us.

All right. Thanks again.

Thank you.

Thank you. I'm showing no further questions at this time. I'd like to turn the call back over to Rick Brooks for any closing remarks.

All right. As always, we always appreciate your interest in what's happening here in our business. So we thank you all, and we wish you the best for a great holiday season. We'll talk to you in March. Thank you, everybody.