JOANN, Inc. ver: 3

Q1 2022 Earnings Conference Call


spk_0: welcome to the birth order with luke twenty two when he to earn a call for joe and incorporated my name is adrian another operate of today's call at this time his fifth or analysts and only mode later will conduct a question and a a profession during the question it's special if he have a question please press dar and one on your touch tone phone please note the temperate this being recorded and i'll turn the colored eight eighteen director of both the relation you may begin
spk_1: the you are really good afternoon oh what to remind everyone the comments me today may include forward looking statements which are subject to significant risks and uncertainties the good cause the country's actual results to differ materially for management corner expectations these statements big as of today and a company undertake no obligation to update or revise any forward looking statements to reflects ups when events new information per view pewter circumstances please review the cautionary statements and risk factors contained in the company's earnings press release and recent violence with the fcc during the call to day management may refer to certain gaap financial measures a reconciliation between the gap and on got financial measures can be found in the company's earnings press release which was filed with the as he see today and posted it to the investor relations section of chileans website and investors dodge o n dot com on a call today from julian is wade mcmullen president and chief executive officer and that shoes chief financial officer ellen out from the call over to wait mikel on wait grab another that you for joining us today
spk_2: i would be remiss if i didn't start by welcoming aging to the join a team they didn't we lead or of us relations average and is an extremely town leader with extensive background the financial markets i know you will really enjoy getting to know him as we share the joy and story did girl and potential stakeholders related lee is truly grasp on the barge return to the public equity markets mentally already been my with their company's history going back more than seventy five years from his humble origins in a single location job ugly them to has become the nation's largest battered and crafts don't for those who are new to our story that joel emissions to inspire the good spirit in each of us the strong legacy as a nation's category leader and selling we're also on the fast growing retailers in the arts and crafts category with a robust homage platform our business to be an inspirational leader that health everyone finer how the blaze through superior assortments strong merchandising execution and a relentless focus on customer service experience or first for full color as a public company was accessible one and exceeded our internal expectations are still friends remain strong going to fifteen percent over last year's first quarter with that strength spread broadly across are much less categories customer segments channels and ya are these we also draw gross margins where to control the bet is to increase net income to fifteen point one million expand adjusted ebitda margins by five hundred and seventy basis points to ten percent of sales resulting in a thirty five point eight million or one hundred by five percent increase in adjusted he would divert as last year's first quarter well now provide more detail on our financial performance i when also really highlight or momentum i'm debt reduction over the past year driven by are many balance sheet initiatives and seventy seven million dollars in net proceeds from a recent i peel we reduced or long term net debt by five hundred and seventy million dollars from the same period last year seven hundred sixty million dollars at the end of our lives quarter and we anticipate further debt reduction to level of six hundred to six hundred fifty million dollars by the end of fiscal
spk_3: when to apply to
spk_2: over the past several years we've been on a jury to truly transform joanne and define a differentiated customer experience that will lead a sustainable growth in value creation while the pandemic del all retailers including joanne many challenges over the past several years we've been laying the foundation to elevate the joanne experience across several key initiatives for us the pandemic crisis was the intersection of opportunity mean preparation and this in turn has made us one of the best growing stores and online retailers over the past year or initiative to refresh our stories continues a show enormous promise as we are literally stepping out of traditional sewing arts and crafts base into one that as future relevant and far more experience you'll we believe the impressive top line a bottomless we are experiencing in large part is because or from any customers we truly are are there disneyland the place they go to be inspired to connect and to create we believe that are extremely strong that promoter scores for the validate our success and driving repeat visits and attracting new customers when we get it right we expand share of wall of traditional customers and attract new customers as well as related or looks initiatives we are now beyond the pilot phase of our store a nation program and around me to the execution these in this new phase will be significantly enhancing are servants and improving our customer experience across the vast majority of joy and stores over the next seven to ten years and are targeting of for your overall payback a total capital and project and expenses and dusted is part of our story push programs will also do a significant number of relocations if or of the overall real estate strategy we further reinforce a relationship with our customers through our data driven digital capabilities customers can interact with their brand whenever and however they want cause with connect with us through our newly redesigned mobile first website joined dot com and are widely used mobile application has generated more than twelve million downloads today these points of differentiation are reinforced by an audible friendly and trust a team members a significant number of whom are sewing and craft and duties to offer a services or it had experience for customers that we believe cannot be replicated by mass retailers were pure play online retailers we've invested heavily in around the capabilities over the past several years and this too is not gone unnoticed by customs effect joanne was recently recognized as the number one fastest growing economies retailer i'm on the field of one thousand by digital commerce three sixty four the year twenty twenty one and what we greatly value or a hundred and fifty five stores with nearly one hundred percent of our source cash flow positive we continue to robustly invest in a rapidly growing best in class army channel business in which we serve our customers the differentiate manner by offering so them being it with all the options including bulbous curbside pick up and should the hamas essentially we never want to give our customers a reason to leave joe an ecosystem er homage our platform is now achieved that give scale with over affably at sales in the past fiscal year with seventy percent of feels will directly by the physical store location and roughly forty percent either picked up in store at curbside in the latest quarter amish you know contributed rationally thirteen percent of our net revenue compared to four percent in the same period last year importantly are only platform is highly profitable and leverage just central and their party capabilities as well as or efficient in store for from a network we're currently investing in additional with don't give ability that will support both army growth and our overall supply chain network which by this additional gamecube ability to ramp up throughout the fiscal year and be fully complete by to bring of twenty twenty two our ability to effectively market to our customers is another critical component of our business success
spk_1: leave levers are a bus the around data to segment and tory customers allowing us to be relevant and further dried customer engagement we tear our customers based on total tail fine and frequency of purchase and last quarter roughly one third of accountable store sales were generated by our top three million customers the best customer shot at i frequency good
spk_2: really strongly to are positive gross margin friends or recent success is also being driven by new customers were also shop at i frequency and generate strong average to sites based on a customers limitation new customers account for the second highest rate of sales growth and sales contribution across our customer tears why are we seeing this broad these custom success but we believe it's because we appeal to all skill levels whether you're not a sport expert we an unparalleled overall assortment most of which cannot be directly crush shot in our team member serve as true friendly clever allies including off a variety of classes and services that help our customers on their selling or crafting story we filled with a better backdrop remains favorable to joanne as evidenced by or continued market share games and strong gross margin trends in the latest quarter we're a leader in the virus so i get annoyed with the thirty three percent market share and we are rapidly growing and the other half of our business which includes arts and crafts seasonal and court underlying his momentum is that that that brought my twenty five percent of our customers made to sell nuclear platforms such as at the shop if i eat a and those mart exchanges continue to grow these customers depend on us to provide supplies of they need at the right price so they can operate their own successful and profitable businesses encouragingly related memorable trends including join sales are both selling crappy machines which have also been growing even more so in the past year these machines will provide a good foundation for the business really board as balance deals with his customers is significant was showing now reaching an entirely new younger customer demographic and based on the ongoing technical innovation to cross the graph category we believe that the right acknowledged combined with the coolness factor when one customized personalized share or even so will be a major driver in our industry and our company for many years ago we also have series of several exciting growth initiative and process which we will he will our staff and a new and lucrative market domestically and abroad and i'll be sharing more about these over time during subsequent call while there are many things to feel great about we remain vigilant a potential risks and wait him and ways to mitigate inflation is certainly a risk but with that largest issue the we're counting or the area of gentle supply chain disruptions and increasing costs particularly oceans free that said for on we delivered at of our internal plan for the fiscal twenty two and a professional twenty jubilee wish be able to deliver on the plan for the bells of the year where these additional supply chain costs should be able to be offset by the continued robust product margin expansion in summary are strong first quarter results should set the foundation for exciting year ahead of the newly public company or team members remain true to our mission ambition to inspire creativity and ourselves and our customers and our customers find their happy place the joint leadership team has never been more enthusiastic about our future thank you for older support of our journey and with that to turn the call over to man to discuss our first quarter results in more detail
spk_4: thank you wait i to truly grateful for the efforts are both of our entire organization collectively our field distribution center and corporate team is unwavering focus on serving our customers and communities resulted in strong first quarter results for join
spk_1: bellamy share highlight of our first quarter of fiscal twenty two comments which exceed our internal plant on top line sale performance operating margins and bottom line profit net income was fifteen point one million dollars in the first quarter of fiscal year twenty twenty two compare to a lot of twenty three point six million last year deluded earnings per share was thirty eight cents compared to a loss of sixty eight cents in the same period last year just a diluted earnings per share was forty six cents compare to and adjusted loss per share of thirty one sense in the first quarter of last year
spk_2: as we mentioned adjusted ebitda increased a hundred and sixty five percent to fifty seven point five million dollars compared to the same quarter last year
spk_1: that girl was driven by the sustain momentum and sales and customer engagement we experience last year
spk_4: just to be without the percent of failed expanded by five hundred seventy basis points to ten percent driven by strong growth and gross margin and our ability to manage growth and expenses well below are increase in net sales
spk_1: i will now provide more detail color on our quarterly results net sales for the quarter in crete fifteen percent to five hundred seventy four point four million dollars compared to the same period last year with total comparable sales also increasing by fifteen percent
spk_2: driven primarily by an increase in customer transactions
spk_1: or only channel also remained strong an important part of our business reaching seventy six million dollars for the quarter representing thirteen percent of total sales
spk_2: as economy rebounded and coven eighteen restrictions have less and throughout the country we saw broad based sales growth across all geographic regions gross margin expansion with a key driver of are significant improvement
spk_5: in earnings for the quarter
spk_2: gross margin dollars increased twenty three point one percent compared to the same period last year to three hundred and two point seven million dollars reflecting a gross margin rate of fifty two point seven percent compared to forty nine point two percent in last year's first quarter a three hundred and fifty basis point improvement
spk_1: this was driven by several factors including reduction average cost per unit driven by our ongoing strategic sourcing efforts more optimal levels of promotional discounting an improvement in our inventory quality that have had a direct impact on reducing shrink and clear as markdowns
spk_2: these gross margin games were partially offset by higher import for a cost that have impacted a variety of us retailers first quarter action expenses increased by three point two percent to two hundred forty nine point nine million dollars primarily due to slightly higher selling costs given the first quarter strong fifteen percent sales growth as well as from higher and cent of compensation a curls growth and expenses was partially offset by a reduction in cost incurred in the first quarter last year relating to our response to the coven eighteen pandemic that did not fully record this year as a percentage of net sales as she an expensive for the first quarter were forty three point five percent and improvement of five hundred basis points compared to last year's first quarter as we have leveraged fixed cost against our sales growth and continue to identify and implement operating efficiencies depreciation and amortization expense was twenty point four million for the first quarter of pickled twenty twenty two an increase of six hundred thousand dollars compared to the first quarter last year driven primarily by investments in information technology store pre opening and closing expenses totaled one point eight million for the quarter consistent with the prior year interest expense for the first quarter was thirteen point two million the nine point five million or a forty two percent decrease compare to the first quarter last year this decline in interest expense was primarily driven by a thirty eight percent decrease in average debt levels vs last year's first quarter or blended interest rate also defined as we utilized as we utilized ip all proceeds to pay off our highest interest trash of term dead in march
spk_4: i will now highlight a few select and fallacy items
spk_6: our long term debt
spk_2: was seven hundred sixty point four million as of may one twenty twenty one a decrease of five hundred and sixty nine point five million from may to twenty twenty and a further decrease from the seven hundred eighty six point three million as of january thirty and twenty twenty one or seventy seven million in debt
spk_1: proceeds from our initial public offering we used to retire debt primarily are term loan do and twenty twenty four which has been repaid and bowl
spk_2: merchandise inventory drinks decreased by seventy five point one million or twelve point two percent in the first quarter of fiscal twenty twenty two compared to last year
spk_1: we've continued to improve inventory turn and quality of our overall inventory which are generated strong year over year improvements and shrink reduction and a lower translation of clippers inventory and markdowns we continue to be pleased with our ability to maintain healthy and stock positions in our store locations and i live
spk_4: at a lower overall him and tory investment cash and cash equivalents were twenty two point seven million as of may one twenty twenty one down from one hundred and forty seven million at the end of the first quarter last year
spk_1: the figure from last year reflected additional cash the company carried on the balance sheet from a drawdown on her ass had paid revolving credit facility which was repaid during the second quarter of last year
spk_2: and of the end of the first quarter the trailing twelve month adjusted he da reported under our credit facilities was three hundred sixty three point six million resulting in a reported leverage ratio for net debt less cash to adjust even die of two point one tax on may twenty first twenty twenty one our board of directors declared a quarterly dividend of ten cents or common share the dividends payable june twenty fifth twenty twenty one to shareholders of record at the close of business june eleventh twenty twenty one the first quarter dividend will be the company's first since we lifted on nasdaq on march twelfth of this year
spk_1: in summary we're very pleased with are strong financial performance as quarter driven by sustain growth in our top line sale trends and gross martin improvement
spk_2: this momentum was broad base across our retailing operations and reflects continued improvement in consumer sentiment
spk_4: as we mentioned in is prepared remarks while he expect to incur higher supplies and cause based on the current operating environment we are very comfortable and are believed to contain these near term and went to a variety of margin enhancing initiatives with that we'd be happy to take your questions
spk_0: thank you when now begin the question answer session if the have a question these tests tar and one and you touched on phone if you wish to be the most in the queue please press the pound sign or and has a now the the lamp by the first question now if he is speaker phone he may need to pick up the ancestor of were pressed amber once again in a question please pets die in one on your touch tone phone and a classic citizens this the keep bank of america your line up and
spk_7: oh thank you i can get up the locker room with that thing it's drivers of that gross margin on this quarter and i get or he either quantify or rank order the impact of the strategic sourcing efforts a promotion activity and shrimp or any other good guys to gross margin
spk_4: charlotte and of matt i'm happy to do that yet primarily driven by what we would qualify internally as product margins so i was adam primary driver of that being our ability to optimize discounting relative to what we are able to do a year ago out
spk_2: the closely followed by what been ongoing since out of our direct sourcing ah wins in terms of being able to go direct a factory in many cases or negotiate better terms with existing vendors
spk_4: after that i would say a deadly the strength initiative has been a big win for us again just a lower all overall him in tory carrying values is helpful there but we've also implemented a number of controls in our stores over the last twelve eighteen months there are starting to really bear fruit and then one i would quote of shortly after that i think longer term is something that were quite excited about is just
spk_2: the overall lower penetration of clearance to our total inventory and privileges sales of markdown hundred to are toilet gotta lotta under data points on we actually bill for the coming quarters that actually can be one of the nicer to challenge for us going forward
spk_7: three and a big a lot of those benefits when near theoretically continue in this as the king of the glencore her and i mean is there anything other one time and temporary nature that we should think about our your a lot of these benefits likely to continue
spk_2: amen man jumping i think these methods would likely continue again up to one thing we're seeing now is really young and primarily these massive oceans rate increases and these are you know i'd say yeah
spk_8: the that is is they're probably on president and him in their nature but the good news is as they're not been among some point they're gonna go back to normalcy
spk_4: yeah is a resident kind of and guy i talked to we do feel their sustainable certainly the promotional environment on could change i think that a portion of the benefit were saying but i would also trivial much of that to just our own analytics and on really reading up on pressed and number of new customers we are coming in to the page and really understanding ah their sensitivity to promotions and our ability to leverage ilo bottle against that
spk_9: we do you feel the most of that sustainable
spk_10: right thanks very much
spk_0: if you've in it
spk_11: and an expert and something park or anything barclays the line is open
spk_12: play one place for taking my question and to the first good quarter out of the gate
spk_11: and you tom
spk_4: can you talk a little bit about what what on what categories drove some of the sales growth and were existing continue momentum
spk_13: yeah i mean nor are are you know our results very broad base really all of our core division some were up and growing on in iowa
spk_2: nightly especially on astronomers i was really are arts and crafts and seasonal was was it it stronger than balance the but i'm very broad based on you know selling wasn't as far but one of the things even though selling telling his is up nicely and is going to two years that but what would put out a mystic about is similar biggest businesses and selling of actually are actually still somewhat shut down so i'm you know things like are fashion barrel or special occasion you know and and a result of the sale to come with and terms of with a and now know these businesses as and large a bunch of amateurs or amazon you know weddings got clearance can the air as the hasn't done
spk_11: you know our problems with those kinds of things and as we see different geography isn't supposed to open up be overseen those businesses now start to blossom but we did that into the actual a nice little tail and for us to was we're back to the new normal great though and just a quick ball up maybe on on the the storefront on i'm on the refresh plan movie was reminded how many projects you plan for this year what would they they expect the timing and just broadly what kind of
spk_2: returns you the on on a store refreshed program in terms of of can't lift or can profitability thank you a great by since this is matt we were all fairly modest number of projects this year or somewhere between ten to fifteen they'll be completed as we've talked earlier on a bit of ah and impairment are building a plan those projects as here just given the pandemic don't ask construction crews and are so many markets we are on we've just completed a thorough review of our college and in terms of our strategy for those requests projects or and are well on our way to ramping up to full roll up our starting ah really the end of this fiscal year and moving answer the next that will result in about sixty seventy projects per year
spk_9: we endeavor to have a blended return on those projects of about four years pay back and the initial investment into those into the project on some of them will blend a bit longer than that a lot of them are more quickly where we're getting pretty healthy lives on the
spk_14: project for relatively modest that
spk_0: they grow up
spk_15: internet question and and even for it as the gun handy line up and
spk_1: i can even at way maybe apollo for your you mentioned machine sales or during the prepared remarks here but just curious if you get die provide some color on the quarterly performance and he update
spk_16: update thoughts on i expect machine sales the trend this year versus last
spk_1: a year holistically and then
spk_2: any any sort of change in and those year one or year to spending trend to call out or relatively consistent what we talked about before us a machine sales across the border then very strong i didn't i dig around posts two hundred percent was over some of a to use databases and they can do to be strong and you know the days of the sewing from as making are long gone and the think that kind of stopped in september october so i'm an app that allows we feel very very good in bristol seeing a lot of young consumers come in and and learning the art and evolving we're seeing experience consumers continue to trade up i'm on it was allowed to grab machine very strong very good pipeline of innovation still coming i'm and customers are engaging in we're seeing your very good follow on sales were running the metrics out of ship same as a sport so me again i think as a little bit distorted because a lot of the some major events to do a lot of selling of are not happening yet but they're starting to and so was doing so good life where that is happening another were pretty optimistic that these trends are yours day and i'm and that we're not going to see if you know of the be drop off and we're still seeing on
spk_4: we did some trapping of our new newer customers recently we're still seeing their frequency of it and about twice what are our customer it and their average ticket fifteen twenty percent higher so yeah we're still seeing her again
spk_17: one activity those customers that the about their first machine last year
spk_18: and then maybe just that a quick follow up on
spk_15: on the expense side of the piano
spk_11: in any sort of get on how you're tracking relative to those in direct spending stating target for you're laid out to the did it did seem like he acts the a sort of i've been on expenses here relative to the internal plan was so it was that something specific to call out
spk_4: where does your breivik cheap and against those those goals as a license a little about i would say we a devil your seen some good trash and ah and and beers and projects that we've run this year i would often say we're seeing nice ability to be more efficient on are lower inventory carry that provides some nice flavor of isn't easy for us and our distribution centers as well as our stores on we've we've done a i think i'm pretty good job
spk_19: leveraging those i think that also a bit of potential tailwind for us as we continue to be able to manage pretty well
spk_20: and a lower inventory matter
spk_21: thank you
spk_0: and que se
spk_22: and an athletic computer to eat sandpiper stadler you line up and i good afternoon my congratulations on the first quarter out as well an emmy just a follow up on knob mad smear most recent comments other fees question i would new customers i'm i know in the past who talked about the twenty twenty cohort of customers at by either a sewing machine or a cricket machine and thought that that the sales the view for for twenty twenty one was based on retaining about sixty five percent of those customers and that those customers on average we'll see about a sixty six percent increase in spain from year one year to all line with the historical matters is that something now we're getting into qq and were laughing these compares
spk_4: you guys are are still continue to see hold true yeah i think generally the as i mentioned earlier the frequency and the basket value from their customer is by in least as strong as we've seen a story clean what we hoped i would say on the other retention piece was also talking with our tickets rosser bit and his earlier in the we are probably a little bit early to tell if we're gonna be kind of in that mid sixties to seventy percent retention rate are just because we have some of these customers were added
spk_22: i and or quarter last year but certainly were and trend for that and and expect to out to be able to achieve that how can i write and i'm on i guess there's there's no formal guidance for the second quarter but at least where the consensus number said would have your sales growing on a to your basis
spk_4: at about fifteen percent and that's coming off of q one where sales i to your basis grew eleven percent says raising nuance with cute you were on a to basis we could see some acceleration or or conversely do you think maybe the to your trend what's that you're decline coming off a key one
spk_2: so what i would say about a two year trend for second quarter is on with a probably to think about ah with that a what we look at his dad to did the year two years ago that second quarter was a pretty porter for us and as they our first quarter that year was by far our strongest quarters answer some of this is really
spk_4: leave the trends in that two years ago time period
spk_2: and we as we feel like our cat a quarter to quarter trans in terms of sales are gonna someone normalizes year and it may be the one piece don't go against says it's wade mentions we deal reduced awesome businesses that have been shut down due to cope and things like are celebrations categories facilities
spk_22: we are hopeful those will take off some steam as we move to the year okay great up maybe one last question just thinking forward as well
spk_4: i'm i believe we're looking for some odd ongoing gross margin expansion per year on year to the rest of the year you are they now free cause is a headwind and and you expect to offset those does that imply think was marginal probably run more flattish year on year or do you still expected to see your your games in the coming quarters
spk_2: yeah so we're really speaking to be held off that relatives are expectations that we had expectation the grow margins we still have expectations to grow margins are really saying is we as and tailwind that me would have had an even more optimistic those are to be softened a bit
spk_1: i mean for perspective on the am on the ocean free know what we're seeing now on some of that know the that the brokered you know of
spk_4: containers that we're getting his is as high as ten times as wouldn't historically pain so again of gonna ultimately subside and i know others were singing in a similar issues but that probably the one you know anomaly and and i didn't hit us very much in the first quarter that that really is is a thing is that it's as throughout the balance of year
spk_2: and and ultimately we will return to normal so we grew got gross margin by three hundred fifty basis points in the first quarter you don't expect to give all that bad but certainly
spk_22: now that strong a year over year basis for them
spk_0: yep okay very helpful thanks so much
spk_23: and an s class in canton tax havens some wells fargo your line up and hey good afternoon i'm so with again on it that tupper comparing you to it is there any color on on your made trends you could talk about and and then on the at seen a i could you walk us through the the leveraging impact on on your model and to what extent you're able to flex down any of the as seen a cost to better manage that
spk_2: profitability
spk_24: yeah i mean i'm just for some of the newer the company that you do now compare his last year had not only does kind of huge pp users which has been long gone on and also add in a while our largest know competitors are space which other stores down for one also have potter that know really anomalous to to that we're up against
spk_4: oh but you know for made you know we feel good and we may as well as is gonna love in the middle the month but we finished you know really really strong and there's nothing that that makes us feel that does underlying trends that we've been able to enjoy his incremental customers
spk_25: i'm are being so the as big as it did you ever and point
spk_4: the i have any has been a inside
spk_9: to to is historically are slower quarter we do i tend to try and control type even apps and on the unusual trend we're up against for last year or the one day i would say and we br we also make a lot of our i
spk_2: earnings in the back after of the year and a lot of what we need to do to prepare for that occurs in the second quarter so a lot of weight of yellow manage at or below are utterly occasions or while we named share earlier around as dna we are also not going to on put the back at risk by trying to cut costs and allows them they're allowing us to be ready to do that the stronger business and better because when the i would say to as as we've we really spared no expense to make sure that we're standing strong and are in stock positions in our season on being able to really run through the year so
spk_23: you would feel good about that versus the opposite of dry that he had gotten that be able to have to be as relevant or a strong to our customers so it's a choice we made and we didn't wanna serve as well
spk_1: got it that that makes sense and then i'm on on the econ next taking a little bit of a step down in the quarter ice in that that has to do with you know customers were returning to to stores and maybe to talk about whether there is any next impacted to gross margin
spk_2: compared to your palm and and then as we move through the year on you know whether you expect that econ next step back up and and should we expect any offsetting you know gross margin get back it as a result
spk_26: you'll need on the thing to remember as we go and april last year and then you know as we move forward you know we had many of our stores that were you know shut down completely to visitors entering so the only way they deserve them
spk_2: i'm neil was was online
spk_8: lol but now we're in a point you know discourse know much more men a normalized quarter you will i'm not one of our higher for he kind of the numbers you see now and all of our stores are fully open the customers are coming back so i thank you you're getting a good view of what
spk_2: normal looks like as we grow from here
spk_4: yes we think that twelve to fifteen percent penetration an annual basis as a healthy place for the be we certainly have from initiatives or that may grow in the future but it is seasonal so we do typically or even with that a normalized and getting environment and and our economy we would typically out a bit higher penetration for me commerce in the back at the relative to what we see in the early part of the year there's a little bit of primarily with related to free
spk_2: dry consumer free that it as on or margins but i would say it's a relative to the other things we talk about it it's pretty minor
spk_27: are you know you are you have this is now very profitable and we got no couple of really leavers that we can make it even more so i'm from a cause perspective and as well as a top line other than if you know at the new and of normal of and board so
spk_23: encouraged by minute
spk_0: god it that all makes sense appreciate the time tonight
spk_28: and just have to remind your tend to the queue please faster than one on your touch tone phone and in a classic has the cristina fernandez and tough with i secretly line up and hi good afternoon and congratulations and a quarter you didn't mention any government stimulus new you're prepared remarks the you think it hadn't been a said during the quarter in
spk_2: and perhaps keep you quantify it know at any benefit from man and that i when i never see that we didn't have any minister right by if we did a very hard to measure in a lemming birch the snow under of no under thirty dollars
spk_4: and how the customers we have it's it's you know it's very different than ours the automotive new appliances from the like so
spk_2: no there's nothing there that we think distorts the quarter vs and online one any meaningful way he goes up for this quarter specifically those occurred when what was already expected by us to be the strongest part of the quarter it's when we are underrated it's when we're up against the kind of the worst of story coven shut down
spk_4: and last year we also had an earlier research this year which is beneficial for our business
spk_28: so yeah they get to a point that me it even a little muddy or for us really can sort out how much of that strong period of the corner with you to the and then i half follow up question on promotions key comments and binder seen across the industry in this industry traditionally has been promotional thing to the extent that it some of your competitors bring back promotions did you feel compelled to follow them
spk_2: or do you think that you're not being damned said of differentiation in your product you can stay and a lower level versus year historic historical and on and yeah tell me on throw my opinion american drone has but you know that we're seeing of you know of debris rational environment out there and and he always weeks to promote were always in to promote but i think we're getting smarter as marv how and when and why we promote our customers seem to be with us and no both are historic customers with us but i think importantly we do get great value promote the way they promote oh now and a lot of a new customers that that he added them with us for a long time they're they're accepting of are valuable position with it is still very robust so i don't see that personally no changing a me i never said
spk_29: never but i think right now it's a good environment land of the diesel for some time
spk_0: delivery
spk_8: and we have no further questions out and the call back over to mr way clan for any other thing remarks
spk_1: look i swear thank all of you you know it's been a is been i'm sure for whole of you and your family's has been am the crazy year
spk_2: but you know here we are an awfully were all moving forward a writer times a lot of the get results were seeing know we really feel is really because of you know this transformational journey we started several years ago you're raising our game and all aspects of assortments nor store experience around a digital market or capabilities talent you know we've got our twenty seven thousand and change employees who work very hard every day that takes takes every single one are doing their partner and i'm grateful for all of them as well and up for those of you that are or stakeholders and
spk_0: an impasse will be it's what you know that we're working as ours weekend everyday and your bags on with we got a great company here and we're we're really committed to dig the even i right

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