Mollie O’Brien - VP, IR Hubert Joly - Chairman and CEO Corie Barry - CFO Mike Mohan - COO, Best Buy U.S..

Kate McShane - Citi Simeon Gutman - Morgan Stanley Joe Feldman - Telsey Advisory Group Brian Nagel - Oppenheimer David Schick - Consumer Edge Research Matthew McClintock - Barclays Mike Baker - Deutsche Bank.

Ladies and gentlemen, thank you for standing by. Welcome to Best Buy’s Fiscal Year 2019 Q3 Earnings Release. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. [Operator Instructions] As a reminder, this call is being recorded for playback and will be available by approximately 01:00 p.m.

Eastern Time today. [Operator Instructions] I will now turn the conference call over to Mollie O’Brien, Vice President of Investor Relations..

Good morning and thank you. Joining me on the call today are Hubert Joly, our Chairman and CEO; and Corie Barry, our CFO. During the call today, we will be discussing both GAAP and Non-GAAP financial measures.

A reconciliation of these non-GAAP financial measures to the most directly comparable GAAP financial measures and an explanation of why these non-GAAP financial measures are useful, can be found in this morning’s earning release, which is available on our website, investors.bestbuy.com.

Some of the statements we’ll make today are considered forward-looking within the meaning of the Private Securities Litigation Reform Act of 1995.

These statements may address the financial conditions, business initiatives, growth plans, investments and expected performance of the Company and are subject to risks and uncertainties that could cause actual results to differ materially from such forward-looking statements.

Please refer to the Company’s current earnings release and our most recent 10-K, for more information on these risks and uncertainties. The Company undertakes no obligation to update or revise any forward-looking statements to reflect events or circumstances that may arise after the date of this call. I will now turn the call over to Hubert..

Building the New Blue strategy. We see significant value generation opportunity ahead of us by successfully enriching lives with technology and providing services and solutions that solve real customer needs. And so, lastly, I want to extend my sincere appreciation to our associates for everything they are doing for customers this holiday season.

You are amazing. Thank you for what you do. And now, I’d like to turn the call over to Corie for more details on our Q3 performance and our Q4 guidance..

Enterprise revenue in the range of $42.5 billion to $42.9 billion; enterprise comparable sales increase of 4% to 5%; non-GAAP operating income rate of approximately 4.5%, which is flat to fiscal 2018’s rate on a 52-week basis; non-GAAP diluted earnings per share in the range of $5.09 to $5.19, an increase of 15% to 17%, this represents an increase of 21% to 23% when compared to fiscal 2018 on a 52-week basis; a non-GAAP effective income tax rate of approximately 24%; and capital expenditures of approximately $800 million to $850 million.

I will now turn the call over to the operator for questions. .

Thank you. [Operator Instructions] Our first question will come from Kate McShane with Citi..

Hi. Good morning. Thanks for taking my question. One of the statistics that you put in your prepared comments was that more of your product is being picked up in-store, and I know that’s been a big initiative for you guys and a lot of retailers.

So, as you leverage the store and as customers come to pick up their products, I just wondered if you could walk us through how that contributes to the overall profitability and how we can expect that contributing going forward..

Yes, Kate. That has been a trend that we’ve been seeing. And one of the things we’ve actually talked about, because the other kind of flavor on this question is, how do you think about the difference in profitability between the various channels and how is that evolving over time.

And, we’ve talked a lot about, in our business, what we actually see as less difference between the profitability in the channels always with the caveat that things like this exactly make it very hard for us to pull the channels apart.

But, this is part of the reason that the overall profitability of our online channel in particular has continued to improve over time.

And it’s a combination of both experiences on the site, but also ways in which the customer’s choosing to come pick up their own merchandise versus necessarily wanting to shift straight to their home in every instance. So, this is definitely part of when we talk about the lesser difference between the profitability of our channels.

This is a big part of what has helped us create a more robust online profitability profile..

And if I can ask one other unrelated question just about GreatCall. I know it’s early days, only been a couple of weeks.

But, I just wondered if there have been any early learnings since it’s been part of your portfolio and how we should think about your strategy with regards to M&A going forward?.

Any early warnings?.

Learnings..

Oh, learnings, yes. Thank you, Kate. So, yes, we are very excited about the GreatCall acquisition. It’s completely in line with our strategy of addressing key human needs. The company we acquired, I have to commend our team for the extensive due-diligence we did, in particular, ensuring the cultural fit.

When we acquire a small company, it’s really important that -- and the alignment of missions is really very, very strong. So, all of the -- lesson for us maybe Kate -- because we’ve not done acquisitions in a long time, was all of the pre-signing and pre-closing preparation to ensure a very smooth integration has been very positive.

The other lesson for us is that the opportunities for us to help aging seniors stay in their home longer through technology, we are more excited than ever about this. And sometimes, you wake up after an acquisition, oh, my God what have we done? No, we feel very, very positive about this.

And we’ve said in capital allocation strategy that our priority was to invest the cash flow in improving the business both organically and inorganically. And this gives us -- we’re paying a lot of attention to this first acquisition because success there of course increases our confidence to do more. And so, our level of excitement is very good.

And I want to take the opportunity to salute anybody from GreatCall listening, they’re great member of our team, teams are working really well together, so feel very good.

Corie, anything you would add?.

I would just add one more financial clarifier, so that it doesn’t send unintended messages. We are very excited about working with the team. We do still expect the impact to be -- of the acquisition to be neutral on a 12-month basis. But you heard me call out a couple impacts here in Q3 and Q4. Those are more about the early part of the business.

One, we have some revised opening balance sheet assumptions, which can happen anytime you have an acquisition like this.

And then, two, we're accelerating some of the customer acquisition costs which is what I'm going to call a high test problem, meaning we believe some of the things we can do together, means we can acquire more customer here early in our life together, and that obviously pays dividend overtime as that customer is on their plan and is a customer with us hopefully for life.

So, I just want to make sure people understand that's not that that business is performing differently than we thought, it's just a bit of how it timed out amongst the quarters..

Our next question comes from Simeon Gutman with Morgan Stanley..

Good morning. Congratulations, Corie and Mike on the promotion. My first question is on the zero to 3 guide for Q4. I think Corie, you suggested the same on the Q3 call. The consumer seems fine, and Hubert reiterated the favorable backdrop.

What's changed a little, at least since then is you had some competitor actions maybe around shipping and then Amazon apparently will have some product they didn't have.

And I'm sure you’ve factored competition in, but I was curious if anything surprised you sort of from when you sort of started thinking about the zero to 3 to now?.

Not so much the price. I mean, look, the consumer and competitive environment this time of the year in particular is always evolving.

And it's one of the things that we actually talk about pretty often how the behavior even of the consumer, how we think about the marketplace in Q4 is a little bit different than how we think about it for rest of the year.

You're absolutely right and that we are doing everything we can to take into account both what we see in a consumer and a competitive positioning as we think about Q4. And yes, there have been changes, but at the same time, we continue to accelerate some of our own strategic advantages and continue to feel very well placed in the marketplace.

And maybe Hubert can hum a few bars on how we're also thinking about even with our own Apple business and the things we do with our Apple products that a little bit [indiscernible] Amazon?.

Yes. We’ve -- as you know -- thank you for the congratulations to my two colleagues and sharing the excitement. We've had a longstanding relationship with Amazon -- with Amazon and Apple, of course. We’ve built over the years a very unique experience setting Apple pricing.

Apple would say that Best Buy provides the best retail experience for their products and services outside of their own home. As you know, we have 900 Apple stores within our stores and they do a great job of showcasing the products and services.

We have 3,000 Apple ecosystem experts in our stores that includes AppleMasters and sales consultants and agents and Apple employees.

And the online experience we've built over the years, it's been years since we've been doing this, is -- from a service standpoint, I think we are the largest third-party [site] [ph] of Apple Care and the largest third-party authorized service provider for Apple products.

So, our focus as a company has always been on the customer and building a unique customer experience. I think, the announcement pretending to Amazon -- Amazon has always been selling Apple products including first-party for the laptops and what not. Our understanding is that they will reduce massively the number of third-party sellers.

And of course, they'll start selling the phones or the watch, themselves, but it’s unclear at this point what the net effect is going to be. And our focus on continuing to enhance the customer experience work with our vendor partners, Apple is a key one on continue to innovate and make sure we have a competitive advantage in the marketplace.

So, I think that the zero to 3% is probably -- it's in line with what we had said a quarter ago. I know, there’s been a lot of noise in the media about a lot of things, but we’re sticking to our perspective on Q4 and we’re ready to serve every customer including you guys on the phone..

Thanks. My follow-up maybe for you Hubert. Just to drill down a bit on the mobile business.

How do you sort of put a fortress around it? And then, can you share with us, like if you look at your Elite Plus customers, what percentage of them are buying mobile through Best Buy, just shopping the category, I’m thinking like just as a phone as a primary purchase?.

So, Simeon, you said, build the mobile business -- fortress around the mobile business. Can you elaborate on your question a little bit, because we’re not in the fortress building business? So, tell me more about your question..

Yes. Look, how do you keep that customer loyal to buying, upgrading their phone, renewing through Best Buy as the years go on? I think some customer survey research that we have from a couple years ago, which show that the captive as well as sort of the Apple Stores seem to be taking share as a whole.

And so, now, there’s some more competitive entrants, if you will, if Amazon does become a first party seller of the phone.

So, how do you keep the customer there and just what is the importance of that customer to the business?.

Yes. I will start and then Mike, if you want to elaborate that will would great. We have been investing significantly in that part of the business, in our stores in particular through the initiative for Mobile 2020. And you have seen that in our stores. So, that’s in partnership with the carriers. Buying a phone is actually a complex experience.

And we do well, compared to other players, when the items that we’re selling are either very large or complex to buy. So, that’s a -- it’s a strength. And so, we’ve invested in systems to streamline the buying processing in the stores, making it shorter. We’ve had these menu boards to make it clear for customers to know what the promotions were.

Of course, the fact that we have Verizon, AT&T and Sprint in our stores is a unique advantage. We have increased labor and the proficiency of the associates, both our own associates and the carriers’ associates. We have, of course, the display of the major brands of phones, Apple, Samsung, and increasingly Google. So, that’s the unique experience.

Now that being said, phones is now the category where we have the highest market share. So, there’s a lot of options and the carriers. And Apple do have an advantage, but we feel good about our momentum and our continued investment in the customer experience.

Mike, what did you add to this?.

Thanks, Hubert. Good to talk to you, Simeon. What I would add to complement what Hubert said is, our phone business is a complicated, so people want to think about their relationship with the carriers.

And so, the one thing that Best Buy’s done is try to simplify their experience, whether it’s in our stores or online, when you can actually talk to a qualified expert, you can review your plan with us, we can compare plans to other carriers, we’re very objective about that and you can compare an iOS ecosystem to an Android ecosystem.

And we still believe even though the consumer is truly -- and you know the statistics probably better than I do around delaying or upgrade purchase, that means they’re keeping their phone longer and they want to do other things with it. So, we are rolling out the amount of stores we can do Apple Glass repairing [ph] in this quarter as well.

This is a key thing that consumers are going to need more help with as they keep their devices longer. So, I think we look at that as a stand for what we can do for customers that's different than an e-commerce only distribution avenue or even what Apple can handle on their own stores..

Great. Thanks. Good luck in the fourth quarter..

Thank you..

The next question comes from Joe Feldman with Telsey Advisory Group. .

Hi, guys. Thanks for taking the question. I wanted to ask about the inventory, again. I know it sounds like it's in good shape and you guys did bring forward.

What was causing the early receipts? Was it trying to get in front of like tariffs at the turn of the year or was it a logjam created by others related to tariffs, or can you share a little more color there?.

Yes, absolutely. So, let me just try first part, I'm trying to make sure that I'm clear. Of 23% increase that we saw in inventory, about call it 16%, 17% of that was just due to the shift of the calendar weeks. So, literally, once you line up the calendar weeks to how much difference it makes, because you bring so much inventory in each week here.

So, literally if I just line up the calendar weeks, that leads a 7% overall increase in inventory, first of all not that out of line with the sales happening [ph] out of the quarter. And then second of all, yes we have clearly made some proactive decisions.

There has been more activity in especially the ports and some of the deconsolidation areas, both due to a lot of companies bringing more in due to tariffs but also even just some of the typhoons have caused some weather delays and things being more lumpy and spotty.

And so, I give our inventory demand planning teams a ton of credit for working really hard to make sure that we were well prepared in phasing that inventory in early so that you would absolutely have it. I mean, one of that largest NPS drivers that we've had, continues to be inventory availability.

And we felt like it is really important for us to have the stuff that people want as we bring it in. You can see it's all basically new and fresh given the corresponding increase in the payables balance as well..

Thank you. And then, just a follow-up. As you think about the holidays and the season, obviously the promotions seem like they've started sooner or at least getting better sooner.

Have you guys seen -- or can you comment on any response? I know it's a current quarter, but if there is any color you can give there, or asked another way, are there any particular catalysts that you're looking for this holiday season or any key products that you think might be the big winners for the season?.

There is such an amazing set of exciting products for the holiday. And that's one of the things that I'm excited about this category which is continued slow innovation. And what's great about this holiday is that the -- there is excitement across many, many different categories. So, gaming is going to be particularly hot.

There is a number of great titles, the Nintendo, Super Smash Bros; Red Dead Redemption 2 and Call of Duty, Black Ops 4 TVs, I think continue to be a big item, people moving to larger screen and smart TVs. And of course we have a partnership with Amazon there with the Insignia and Toshiba 4K USB Fire TV additions.

But broadly speaking, a lot of excitement around TVs, streaming devices, voice assistance with screen. So, screen is going to be a big item. If you bought a voice assistant last year, here is a good news; you can buy a new one with a screen. And I have a few on my kitchen table, lot of functionalities there.

New phones, there has been a number of great new phones that have been launched health, both Fitbit and Apple. Appliances, lots of excitement, small appliances, great gifting items across mixers, pressure cookers, I don’t cook, but I’ve heard, right, [ph] major appliances.

There is a lot of -- this is a more promotional time of the year for appliances than I think ever before -- and then security doorbells. So, there is a lot of excitement for people to come to our stores or shop online with us or again, we’ll come to you.

So, that’s one of the reasons why we’re excited about this holiday, of course there is the general consumer confidence, but there’s a lot of reasons. And we can take care of your entire list. So, just one trip and you’re done..

Joe, specific to your question around -- just so I make sure we hit it on the competitive environment.

I mean, I think the earlier, earlier start to the season is definitely phenomenon that we’ve been seeing over the last few years; it’s something we have taken into account in our own competitive positioning and in our own promotional cadences is reflected in as best we could, guidance that we give you for Q4.

And so, we always talk about how this -- the holiday continues to change, it continues to shape differently, and we continue to have a team that does this -- an amazing amount of work to make sure we feel really prepared to compete as that holiday season continues to evolve..

Your next question comes from Brian Nagel with Oppenheimer..

First off, congrats to Corie and Mike in your new responsibilities..

Thank you.

So, with regard to the buy online pick-up in store, in your prepared comments, you talked about this, the business -- that part of business continuing strengthen.

The questions I have there are, one, is this something that Best Buy is doing what is Best Buy encouraging customers to or is it more of a reflection of the natural evolution of the online market? And then, as far as -- and I’m sure you’ve looked at this, as a customer chooses to pick-up a product in store versus having it shipped to their homes, where is the benefit for -- how you look at the benefits for Best Buy? Is that the overall maybe better profitability or the add-on sales as that customer comes to the store?.

Yes. So, on the first point, yes, this is the customer choice. As a customer-focused, customer-obsessed company, we’re not going to try to make the decision for the customer. So, if you look on our site or in the app, it’s really the customers. There is no financial incentive one way or the other, it’s really up to the customer.

That’s what we said in the prepared remarks. There is unique benefits of picking up in store. You can get it in less than an hour. So, speed is pretty crazy, knowing that 30% of the U.S. population lives within 15 minutes of a Best Buy store.

And then, you could say, you don’t want to control when you’re going to get it -- by the way if it’s a gift during holiday, you may not want to have the gift show up at your home and whatnot. So, it’s really a customer-driven phenomenon.

The benefits to Best Buy, of course, there’s shipping, there is additional items, and we love to see the customers in our stores. And we can help them with any questions, they’ll tend to buy more stuff as well, which we -- but this is not what is driving it. We want the customer to have the opportunity to choose and get the best possible experience.

And on this topic, because we’ve been doing this for so long, we’ve had the opportunity to really improve the process, invest in the systems, invest in the labor, invest in the overall customer experience, and we’re seeing good results.

Corie or Mike, if you want to add?.

No. That’s okay..

Okay. That’s very helpful. Just one quick follow-up question. With regard to real estate, in your release, you mentioned, obviously we had the Best Buy Mobile stores closed and then some repositioning of your larger format stores too.

Any thoughts on how we should expect that effort going forward -- or I guess, what you expect to see on the topic of real estate positioning going forward, repositioning. .

We've been pretty consistent on our real estate positioning, which is we're lucky and that we get to see a number of leases every year, right now we're seeing about 130 leases per year.

We're looking at all of those stores, and not just the stores, but importantly also the markets to try to understand how do we very best serve the consumers in those markets. And we continue to make sure we're making the best decisions for every market and therefore refining down the market positioning.

But, I don't think you're going to see any massive speed up, you're not going to see a change in the overall positioning. You're just going to see us continue to make sure that we feel like the footprint by market reflects the needs of the consumers in that market..

Alright. Thank you and best of luck for the holiday..

Thank you..

Next question is from David Schick Consumer Edge Research..

Hi. Good morning. Thanks for taking my question.

So, there is always this tension of sort of looking in the near-term at what products or latest announcement, whether it's holiday or Apple, Amazon competitor announcement is going on, and then, there is a temptation to go back to product cycles that have been there historically and sort of thinking about your business.

I guess, it would be helpful if you could talk about maybe neither of those, you've talked about services, but what other products? When you have these suite of products at the front of the store that are more discovery for consumers, how are those conversations going with vendors? What does that look like, what is front of your store, things we haven't seen yet, look like over the next several years?.

Hey, David, it's Mike. Good morning. That's a great question to talk about. The biggest evolution that you’ve seen in our stores because I know you shop in them is trying to have people understand what our connected home or connected product ecosystem can do for them. And I think you're going to see that continue to evolve.

We're just starting to scratch the surface around assistant, Digital Assistant technology, both with the screen, without a screen, people can think about personal security and as it morphs into what they think about their own version of health and wellness. So, what you do see at the front of our stores is an exciting amount of real estate.

There is tremendous interest from both current vendors and those who are just starting to emerge to get a chance to be able to have -- leverage our team members and show customers what we truly can do and try to solve one of these lifestyle needs we spoke about them at our Investor Day, specifically around health and wellness, and security.

And I think you're going to see more that as we move into the next few years.

I don't know, Hubert, do you want to add anything?.

The other thing from equity story standpoint is that this discussion -- kind of a discussion around product cycles and specific categories and so forth. The way increasingly we look at it, and of course next year, we'll have opportunities to update you guys around targets and what not.

But, the way we look at is in aggregate the different product categories we sell while within the portfolio there is cycles, as a whole it's a pretty stable basket of things that customers buy. And there is always innovation; you never know what's going to come to your genre, [ph] but there is always that.

The growth opportunity for us is not driven specifically by a particular product launch; it's driven by the opportunity to stand a relationship with the customers. A key fact that I always go back to is that there our share of wallet of existing customers is 26%.

And as we continue to build the customer experience and the ability to build relationship with customers, the growth opportunities from expanding this share of wallet, and imagine - this is not in updated forecast, but imagine the impact of growing to from a quarter to a third.

And that’s the opportunity, that’s the obsession we have, and that goes through really understanding the customer needs, knowing the customer, bringing solutions, hardware services, and then being a part of their life.

So, that’s why in home advisor plays a key role; that’s why Total Tech Support as a way to be in people’s lives on an ongoing basis; that’s getting into the house space gives us these opportunities. So, what’s very exciting, if you look back at the last year or two is we’ve now demonstrated the ability to grow the Company and comp ourselves.

And the growth opportunity looking ahead is driven by this expansion of the customer relationship. It’s going to take time, but it’s a very, very exciting..

And is it fair to say this, there will be Best -- as it has been in the past, there will be Best Buy exclusive as part of what is present to the consumer?.

I think that will always be a fair assumption. We talk about our ability to making curated market and part of that is ensuring consumers know what the products will do and solution for them, and that provides us with a great opportunity to do that, David..

Next question comes from Matthew McClintock with Barclays. .

Two quick questions. The first one, just Corie, you talked about a lot of investments that you’re making, Hubert, you did as well. And you’ve been making investments for 3, 4 plus years.

I was wondering, as we look forward, what are the a bigger buckets of investments that need to be made in the business that could potentially wanted to flow through on earnings, thinking into 2019 and beyond? That would be my first question..

Yes. There’s a few different suites of investments that are what I’m going to call a little bit more ongoing in nature. And when we talked about it at Investor Day, we talked about it in both a larger slots of investments and pressures.

And so, as you think about things like our ongoing investment in people, that come from both very specialized areas, like a smart home experience in our stores, or an in-home advisor experience. It’s also come broadly from our investment in wages and in benefits and in the list of things that Hubert talked about that are important to our employees.

That is a suite of investments that is ongoing, and we believe -- and that’s why we talked about in terms of our longer range plan, that’s going to continue to be a space where we invest.

A second major area of ongoing investment is going to be what I will call our technology capabilities, or those tools that will help our associates and help our customers have better experiences, things like we talked about CRM, knowledge management, those are longer term builds, and we’re going to continue to refine those and make those tools better and easier to use over time including the investments in the digital experiences that Hubert did a really nice job f outlining in his prepared remarks.

And then three, we specifically said we were making a major investment in our supply chain infrastructure. And we were again very clear that that was going to be a multi-year journey for us as we worked on both the space required to facilitate our larger product, as well as the efficacy required to deliver at-speed on our smaller products.

And that again is going to be a longer term journey for us. So, it’s part of the reason we teed all of those up at Investor Day and said these are going to be the longer term investments and pressures and part of the reason we have remained so committed the cost reduction side of things as well..

And then, just my second question is on home theater. Hubert, you sounded really excited about the home theater options for the holiday, and the category ledger comp last quarter, but I didn’t see it listed this quarter.

So, I'm just trying to understand what happened to home theater this quarter? And as we go into holiday, you benefited a lot from a trade up to higher size, bigger TVs. Is there still room to increase the mix of bigger TVs in your sales mix to offset ASP pressure as we look at holidays? Thank you. .

Now, there is always room to some bigger TVs. One of the -- we definitely saw a bit of moderation in the TV industry compared to what we saw in Q2. I’d call a little bit more like what we saw in Q1. So, it slowed a bit. Good news is, units continued to be up at a pretty good clip; and what you would alluded to, ASPs down a bit.

The nice part is we continue to see people mix into, specifically to your question, larger TVs. And we get really caught up in 4K and the technologies, but genuinely what people want is a larger great TV experience in their home.

And we continue to see excitement around that which kind of props up this concept that this is in one of those cycles that automatically falls off the cliff. It is more -- this idea that we keep providing new and different ways for customers to get bigger TVs with better technologies.

And so, yes, it moderated a bit from the last quarter, but it's clearly going to be a hot item heading into the holidays and we feel very well prepared..

It’s -- sorry, go ahead, Hubert..

I was wondering with Mollie, we have time for one more. So, I think we do, all right..

Our last question will come from Mike Baker with Deutsche Bank..

Hi. Thanks, guys. So, I guess, this would be a longer term question I suppose and I don't know if you're prepared to talk about this.

But, relative to the analyst day that you just referenced, it looks to me as if you're going to come in, you're going to beat the sales plan of $43 billion because you're well on your way to hitting that this year, maybe a little bit below it, but by 2020, you should be there.

Does that necessarily translate into that operating margins or should we still think about a similar operating margin to what you laid out few -- I guess last year? And if the mark is not going up, then why not?.

So, for right now, what we're focused on is finishing out this year and making sure that we deliver on the commitments that we made for this year. We're absolutely going to update everyone as we get to the end of the fiscal year here on what we think our mid-term outlook looks out and how it should be updated.

What I said on the call, and what we alluded to this idea of continuing to make sure we invest in the business in a way that we feel like it's going to set us up for future success remains our focus. And then, we'll help you through the future financial implications of that, once we get through the rest of this fiscal year..

I guess, as a follow-up I'd ask, the same store sales are going to end up being at least 4% for the second year in a row.

How sustainable is that, how much of that is due to really strong products for the last couple of years that might not repeat and you need services to accelerate to replace some growth in products?.

So, I think that we’re obviously excited about the fact that we've been able to demonstrate this very positive trend. As Corie said, we'll provide an update on our Q4 earnings call.

And to the point of product cycles versus customer relationship, our main theme -- the big long-term opportunity for us is the expansion of the relationship with customers. We've demonstrated at Investor Day that the volatility in the sectors is actually much lower than people think.

We like of course the environment in which we’ve been operating this year and we’ll provide the updates on the Q4 call, but very excited about the future for our business. So, with this, maybe I’d like to wrap. I know, this is an incredibly busy day for all of you. We were not apparently the only retailer reporting today, to say the least.

So, thank you so much for your attention. I want to say one word because I’m sure many of those friends and family in California that are impacted by the fire, so our heart is with the population in both Northern and Southern California. We wish all of you a very safe and very happy holiday.

And I know one way to increase your happiness, which is to focus your list with us. So, look forward to seeing you in our stores or online. Thank you so much for your attention and look forward to catching up with you in three months. Thank you..

Thank you, everyone. This concludes today’s teleconference. You may now disconnect..