Signet Jewelers Limited

and welcome to the Signet Jewelers third quarter fiscal 2021 earnings conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. Please note this event is being recorded. I would now like to turn the conference over to Vinny Seneci, SVP Investor Relations and Treasury. Please go ahead.

Great. Thanks so much, Alyssa. And good morning, everybody. Welcome to our third quarter earnings conference call. On the call today are Cignet's CEO, Jenna Drossos, and CFO, Joan Hilson. During today's presentation, we'll make certain forward-looking statements. Any statements that are not historical facts are subject to a number of risks and uncertainties, and actual results may differ materially. We urge you to read our risk factors, questionary language, and other disclosure in our annual report on Form 10-K, quarterly reports on 10-Q, and current reports on 8-Ks. Except as required by law, we undertake no obligation to revise or publicly update forward-looking statements in light of new information or future events. During the call, we'll discuss certain non-GAAP financial measures. For further discussion on non-GAAP financial measures, as well as reconciliation on the non-GAAP financial measures to the most directly comparable GAAP measures, investors should review the news release we posted on our website at www.signetjewelers.com slash investors. I'll now turn the call over to Jenna.

Thank you, Vinnie. Good morning, everyone. We're pleased to report our third quarter results, which I'll share in a moment. I also want to use this call to take a longer-term view of where we're headed and to share my confidence that our Path to Brilliant strategies are working and are positioning Cignet for long-term growth. Let's begin with a look at the Q3 results. Total sales increased 9.5% and same-store sales increased 15.1% versus last year as our stores reopened and we made intentional efforts to capture both pent-up demand and early holiday sales. E-commerce sales increased 71.4% compared to last year through continued execution of our omnichannel focus as part of the path to brilliance. Brick and mortar same-store sales grew 6.8%, with over 90% of our stores open this quarter. This demonstrates that our e-commerce growth isn't coming at the expense of our stores and also demonstrates the progress we're making toward our goal of becoming the strongest omnichannel player in our industry. We generated $606.7 million in cash flow from operating activities year to date by focusing on working capital efficiencies and cost consciousness. Non-GAAP EPS was 11 cents, reflecting the combination of our accomplishments on both the top line and in our expense categories. These results were driven by several factors. First, the passion and performance of our signet team. Second, continued strong execution of our Path to Brilliance strategy, building on the foundation we've established and adding a number of significant digital product and marketing innovations this year. Third, targeted efforts, including marketing and clienteling, to capture pinup demand following store reopenings. And fourth, intentional media and promotional efforts that we put in place to capture early holiday shopping. Our Cignet team brought remarkable creativity, capability, agility, and passion to every aspect of our performance. Pressure can derail some organizations, but it has focused the Cignet team and is bringing out the best in us. We have a saying at Cignet that I love, pressure makes diamonds. That's been evident throughout the entire Path to Brilliance journey, and it's been especially palpable over the past nine months. I am very proud of our team who are at the heart of Cignet, and I'm honored to work alongside them every single day. We are now an even stronger and more united team and company. Our success this quarter is a result of our strategic transformation work. Our focused plan and the investments we've made in people and technology enabled us to accelerate our transformation during the pandemic. Our pivot to digital, for example, was not an abrupt change or a reaction to crisis. To the contrary, it's what we've been building toward for the past three years. For example, throughout our Path to Brilliance journey, we've taken costs out of our company that customers don't care about. and then have reinvested in capabilities that customers do care about. We've invested significantly in digital, in a wider array of financial services, and in better, richer, more engaging customer experiences at every touchpoint. The result is a more contemporary shopping experience that gives our customers greater convenience and flexibility. which carries the added value of offering a safe experience during a pandemic. We've also taken decisive steps to optimize our store footprint and accordingly the size of our organization. This has given us the ability to invest in our people and to bring in new talent where needed. Our organization has never been as strong as it is today. The Cignet leadership team is just one example. We've brought on deeply experienced talent over the past three years to complement the strong legacy leaders who remain critical parts of our team. We've recruited exceptional leaders from best-in-class retailers, from privately held entrepreneurial firms, and from Fortune 500 companies. We now have the most diverse and most experienced leadership team in Signet history. We've also dramatically improved our ability to generate cash flow. As a result, we're better positioned than ever before to make strategic investments that are enabling us to win with customers now and will drive future growth. Data analytics is an important driver of these and many other improvements. We believe we're now one of the most data-driven omnichannel retailers in jewelry. This capability has real potential to be game-changing. It's enabling precision targeted marketing and dynamic content creation, getting the right messages to the right customers at the right time, when, where, and how they want to be engaged. It's powering our ability to localize assortment to ensure we have the optimal mix of new and core product, store by store, day by day. And it's allowing us to bring predictive analytics to our clienteling approaches, providing our associates with highly precise targeting maps that help them bring the best of high-tech and high-touch to their most important customer relationships. Most fundamentally, our digital and analytics capability is driving our omnichannel strategy. making it possible to continually improve the performance of every store, every platform, every channel, based on traffic, customer preferences, and digital demand. The jewelry industry has been slow to move to a data-driven omnichannel model. We are working hard to lead the way, and it's becoming an increasing source of competitive advantage. My core message here is that the performance you've seen from our team these past several months has not been reactive. It's been strategic and intentional. We've been building a strong foundation that is becoming a springboard to our future. We're now at a turning point, moving to a future of long-term sustainable growth. There are several critical shifts underway that we're prepared to leverage, and I want to highlight a few of them. First, customer behaviors and expectations are changing in ways that play to our strengths and will endure after the pandemic is behind us. We're leveraging proprietary consumer research and insights to anticipate these changes and are taking advantage of them. In fact, in some cases, we're accelerating them. Second, we are shaping the future of our industry with our omnichannel strategy, continuing innovation and dynamic responses to changes in the competitive landscape. And third, the power of Cignet's purpose is growing more important to our customers, employees, investors, and business partners. I'll start with the consumer. COVID has changed consumer behavior. but not just in terms of when or where they shop. This experience has prompted people to pause and to reflect on the relationships that matter most to them. The pain and loss that COVID has created is irrefutable. But one customer said something that I think rings true to a lot of us. He said he was taking a fresh look at his contacts and thinking more carefully about who he most wants to spend time with. The unexpected gift of COVID, he said, is clarity. With that clarity comes a desire to do special things with and for the people we love most. People know that the holidays will be different this year, and as a result, they want to make their celebrations even more special. They want the people in their lives to know how much they're loved and are looking for timeless ways to express that love. They're also falling in love. Our early research indicated that we would see an increase in engagements during the pandemic, which has happened. We've seen double-digit growth across bridal with particular growth in engagement rings. Another good example of how we're responding to and accelerating consumer changes is the way we've evolved our digital offerings. I talked last quarter about the launch of our virtual selling capability. This includes an expanding range of services, from virtual consultations to buy online, pick up in store, to curbside, to digital outreach, visual search, and now conversational messaging. We're building momentum across all these touch points. For example, ahead of holiday, we now have a fully dedicated virtual sales force of more than 700 experts, and have also trained more than 20,000 of our store managers and jewelry consultants to sell virtually on our way to training our entire field team. To date, we have completed nearly 600,000 virtual appointments since our recent launch. This is important because when consultants are involved, we see higher conversion rates and higher transaction value. On Black Friday, as is my tradition, I visit as many of our stores as I can. Last Friday, I met with Mandy, an excellent store manager who has been with Kay Jewelers for many years. She shared a fascinating example of how powerful our new capabilities are in her everyday work. She's been able to reconnect with customers she served in previous locations, bringing back customers to Kay. Now she can help them purchase jewelry virtually and leverage their local store team for service. This new sales opportunity is a direct result of our digital consultation platforms and e-commerce capabilities. Mandy exemplifies the power of technology plus trust to drive lifetime relationships with our customers. Another example of our digital progress is our new visual search capability that's driving significant engagement. Our add to cart rate for customers who use visual search is roughly three times that of those who don't. And one of my favorite Q3 innovations is our new conversational messaging offering. While some people want to have a live video experience, many people just want to chat or text. We launched conversational messaging on October 15th and have already had more than 300,000 conversations worth $18 million in sales to date. In fact, nearly a third of that came in just the past week over our Thanksgiving Cyber Monday push. These are great examples of where our customer first pillar and our omni-channel strategy converge and where our future is headed. The second shift I want to highlight is the way our industry is changing and how we're working hard to lead those changes, both to grow the jewelry category and our market share. A clear advantage we have is our ability to blend digital experiences, personal relationships, and physical touchpoints in a uniquely competitive way. Our primary jewelry competitors don't have that same combination. We are working to make this a discernible and sustainable competitive advantage, and we're getting better every day. We're also building competitive advantage in other ways, and I'll mention two briefly. The first is product innovation and newness. In every aspect of our business, innovation is a core driver of Path to Brilliance. Nowhere is that more visible than in our product collections. As COVID hit, our product teams worked with our strategic vendor partners to design and place holiday orders early, prioritize our production, and achieve significant newness. Together, we have ensured we have fresh new fashion items and collections that enable people to express both love and gratitude. To name just a few, we've launched Everything You Are, Unstoppable Love, Closer Together, New Styles for Levian, and new modern collections of Zoom-worthy gold and diamond jewelry across every banner. We have new bridal brands, such as Penina Tourne and Royal Asher and Jared. We've introduced exciting newness in Disney, Vera Wang, and Leo, and our first-ever collection of reclaimed gold and repurposed diamonds with Zale's Remixed Reimagined Collection. We've expanded our customization offerings. Kay, for example, has brought technology to its iconic Neil Lane bridal brand with the Neil Lane Configurator. I'm grateful to our vendors for their partnership as they are a source of competitive advantage that is differentiating our banners. Beyond product innovation, another advantage we have is the diversity of our banner portfolio. We've used data analytics to map customers and purchase occasions in the jewelry category and are now positioning our banners to capture a broader share of the market. This includes communicating our banner value propositions in more precise and relevant ways with target customers, testing of new store formats, launching services like the custom design-focused Jared Foundry, and new products like the Zales Designer Spotlight, an online marketplace for up-and-coming independent jewelry designers. We're also moving decisively to create advantage when we see changes in the competitive landscape. A number of jewelry retailers are weakening, and in some cases, closing. When closures occur, we move quickly to capture the upside. We geo-target our marketing to serve customers left unserved. We look for opportunities to attract top talent when jobs are cut. And we leverage competitive closures to strengthen our real estate position within trade areas to serve customers even better. There will likely be more competitive closures in the months ahead and we'll continue taking dynamic action to shape the next normal in our industry and grow share in the process. The final shift I want to highlight is the accelerating importance of our purpose. Inspiring love is a powerful concept. It's our north star, the reason we get out of bed every day, and it's a demanding standard to which we hold ourselves accountable. I'm very proud of what Cignet stands for. Our purpose is a source of strength internally and externally. The pandemic experience has deepened people's empathy toward others, and as a result, their expectations for values-based leadership are growing higher. But they're also prepared to reward companies that take action. 70% of consumers who feel a personal connection to a brand spend twice as much with that brand compared to those who don't establish that connection. We build these kinds of bonds when we stand visibly for what's right, when we use our voice to help create the change we want to see in the world. We also inspire passion, pride, and loyalty among our employees by acting on our values and fulfilling our purpose. We're pleased that Signet, for the first time, was honored to be recognized as a certified Great Place to Work company. We're also proud that Signet was named to the Bloomberg Gender Equality Index for the second year in a row. This honor is rare among retailers, and Signet is the only specialty retailer in jewelry to achieve that recognition. We've created a culture that great people want to be part of, 86% of Cigna employees who responded in a recent survey said they feel a sense of pride when they look at what we've accomplished together We continue to look for opportunities to walk our talk. For example, at the suggestion of Cignet's Black Employee Network, we created the Your Voice is Gold campaign for the 2020 election, pledging paid time off to all employees so they could play their role in our democracy confidently and securely. We closed our stores for the morning of Election Day, and our employees logged more than 1,000 hours of paid time off. The key point here is simply to underscore that Cignet's purpose is clear and matters. Consumers increasingly want to buy from companies they believe in. Employees want to be part of companies they believe in. And business partners want to work with companies that they and their employees want to be part of. That's the kind of company we're creating at Cignet. I hope this perspective helps you put both our Q3 performance and our longer-term future into context. In summary, we believe our Path to Brilliance strategy is working. We're winning with customers based on strong innovation and deep insight. We're investing in people and technology to continually strengthen our advantages. and we're inspiring love to build bonds with customers, pride in our employees and partners, and growth for investors. I'll now turn the call over to Joan to take a deeper look at this quarter's results and share our outlook for Q4. Joan?

Thank you, Jenna. Hello, everyone. Q3 performance reflects the traction of our Path to Brilliant strategy, delivering top-line growth, expense control, improvements in working capital that drove strong cash flow and a return to Q3 profitability. Total sales in the third quarter grew 9.5% over last year, and same-store sales grew 15.1%. This growth reflects our company's evolution and ability to meet shifts in customer shopping trends this year. I also note that we believe the top-line benefit is from timing shifts. And we captured pent-up demand from the second quarter, as well as intentionally drove early holiday shopping through marketing and promotion, which is expected to impact the fourth quarter. Before continuing our walk through the P&L, I'd like to color in some of Jenna's comments. The 71.4% growth in third quarter e-commerce sales represents 18.4% of our total sales. We were able to maintain that level of growth with stores mostly open through investments like visual search capabilities, search as you type functionality that returns more intuitive results, new customer routing technology that is getting customers assistance more effectively, as well as the launch of messaging that allows our jewelry consultants to message directly with customers' phones. The digital achievements are enhanced by the strides we're making in optimizing our physical footprint. The positive brick and mortar same-store sales reflects our continued shift of our store base to off-mall locations. Though approximately two-thirds of our fleet is housed in traditional malls, of the 380 store closures planned for this fiscal year, we have closed 316 by the end of the third quarter. the large majority of closings continue to be in traditional mall locations. Supportive of our continued portfolio shift to off-mall, we have seen that traditional mall foot traffic is lagging to our other formats, especially in this macro environment. As we previously discussed, our greenfield analysis from earlier this year has informed us on how to best represent our banners and formats in a given trade area, helping to drive omnichannel growth. Continuing along the P&L, we delivered non-GAAP third quarter gross margin of approximately $437 million, or 33.6% of sales. This is 250 basis points above last year, largely due to higher sales volume and lower store occupancy costs. SG&A was approximately 390 million, down about 9 million to last year. The decline was driven by lower labor and operating costs that was partially offset by increased advertising investments made to communicate the extended holiday selling period. Please note that store labor costs will sequentially increase in the fourth quarter as we have implemented extended holiday shopping hours and over 2,000 concierge stations. Non-GAAP operating profit was $46.8 million, up over $76 million to last year, and excludes $7.1 million in asset impairment and restructuring charges related to the path to brilliance transformation plan. Third quarter non-GAAP EPS was $0.11. This compares to a prior year non-GAAP EPS loss of $0.76. Turning now to the balance sheet, continued use of strategic clearance this quarter improved our product lifecycle management and contributed to a reduction in our inventory of more than $345 million to this time last year. While a portion of that reduction is due to the timing of inventory receipts, it also demonstrates our continued focus on managing inventory levels ahead of holiday. Combining our inventory management with extended payment terms within our network of valued vendors has improved our working capital. Those improvements, along with a tax refund of $164 million, contributed to more than $606 million of cash from operating activities this year, supporting reinvestment for long-term share gains. Capital expenditures remain on track to be approximately $85 million. Fluctuation in inventory levels combined with the increase in our cash position allowed us to pay down approximately $300 million of our revolver this quarter, as well as an additional $190 million subsequent to quarter end. Cash and equivalents ended the quarter at $1.3 billion, enabling us to maintain flexibility and remain prudently cautious in this current environment. Now, regarding our cost savings efforts, we remain on track to deliver the $285 million of cumulative cost savings under Path to Brilliance by fiscal year-end. These efforts are largely derived from efficiencies in labor, store operating, and inventory-related costs and direct sourcing. I'd like to quickly update you on our financial and jewelry services. As of the end of the third quarter, accounts that we've originated were $39.6 million, net of allowances, and continue to perform in line with expectations. We continue to enhance our payment options to include installment loans, Apple Pay, Google Pay, as well as the ability to fully apply and buy online across all payment products. We note payment penetration remains lower to last year at 42.6%, though improved over last quarter by 240 basis points. Our goal is to offer our customers a wide range of payment alternatives to meet their needs. Importantly, in October, ahead of holiday, we made substantially all warranty service products available to our customers online. Looking to the fourth quarter, our preliminary same store sales through November 30th were up approximately 3% quarter to date versus last year. For the Thanksgiving weekend through Cyber Monday, same-store sales were down low single digits, reflecting weak retail store traffic trends, somewhat offset by higher conversion rates, migration to digital platform, and higher transaction value. We have taken additional steps ahead of the shopping season to help manage high-traffic days, including earlier and longer promotional periods, additional labor in the form of longer store hours and concierge locations, as well as expanded fulfillment capabilities to meet customer demand throughout the holiday. That said, since our strongest holiday weeks have historically been the two weeks prior to Christmas, we believe same-store sales could be negatively impacted in December as a result of weaker retail store traffic trends COVID social distancing capacity constraints, and store closures due to virus trends. As such, we're not providing financial guidance at this time and believe COVID-related issues will have a more significant negative effect in December versus November. Before we open the call for Q&A, I'd like to take a moment to thank the Cigna team. This year has challenged each of us and our team has met that challenge to drive this quarter's results above our expectations. I have confidence that our team will continue to exhibit resiliency and agility into the future. We wish all of our team members, customers, and business partners a safe and healthy holiday season. And now I'll turn the call over to the operator to begin the Q&A session.

Thank you. We will now begin the question and answer session. To ask a question, you may press star then 1 on your touchtone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star then 2. At this time, we will pause momentarily to assemble the roster. The first question today comes from Lorraine Hutchinson of Bank of America. Please go ahead.

Thanks. Good morning. I was just hoping to get a little bit more detail on the third quarter comp, maybe a breakout, how bridal did versus fashion.

Hi, Lorraine. Thanks for the question. We saw double-digit growth in both our bridal and our fashion portfolios, so really strength across the board.

And were there any brands or categories that – you tested in 3Q that you're particularly excited about for the holiday season?

I would say yes, a couple of areas. We continue to see some of the best performance on big brands, including Neil Lane, Levian, Vera Wang. We now have online customization options for several of those, which are doing quite well. And our new launches, I mentioned in my remarks, the Panina Tourne line at Jared, Royal Asher at Jared is doing really well. Everything You Are is a great launch. sentimental gifting opportunity that we have across Kay and Zales. We're very thankful to our vendor partners for working with us early to achieve, I think, the best level of newness and optimized core assortment that we've had at Cignet. So they really did a great job in a tough time managing all the social distancing and everything to get us great newness into our stores and online.

Thanks. And then last one for me, there's been a lot of talk about very crowded shipping channels over holiday. How are you thinking about capacity constraints? What's your cutoff date for Christmas? And do you think you can process the volume that you need to this holiday season?

So a couple of things on that. One, that's something that we've been anticipating, so we've worked ahead on it. We took some of our existing internal distribution network and have made it external facing, so we now have five times the shipping capacity for e-comm orders this year alone. versus last holiday season. So that's something we started working on end of last spring and have been able to bring that to life. And given our strong e-commerce numbers, it's already paying off, but I think that will especially be true in December. The second thing that we're doing is keeping our teams safe. So our protocols and our distribution center are very strict, and so we're working hard to make sure we don't have any disruptions on that front. We do expect that there will be high demand across the industry, so not just Cignet, but across the industry as we get closer to Christmas. And so we've been working with our key partner, UPS, to make sure that we can have an allocation of shipping options that are available as late as possible in the season. And then when that cuts off, we have curbside service, buy online, pick up in store, concierges who are helping to direct traffic, especially at our higher traffic locations and fulfill those BOPIS orders really quickly. So all of those are kind of interventions that we've put in place anticipating just what you said, which is some traffic in the online shipping network.

The only thing I would add to that is the pull forward that we've done in our promotions and marketing to try and smooth out some of the capacity issues that that we would anticipate potentially occurring closer into holidays. So our intentional efforts towards marketing earlier holiday promotions and so forth were, you know, all direct, excuse me, directed towards mitigating some of that, help that traffic.

Great, thank you.

The next question comes from Paul LaJuice of Citi. Please go ahead.

Thanks. It's great to be filling in for Paul. I had a couple questions. The first is I was wondering if you could quantify the change in merchandise margin in the quarter and maybe give us a sense of promotional levels. And then secondly, is there any way to give us a sense of how much of your comp this quarter maybe was a pull forward of demand or how your marketing dollars shifted around between quarters? Any color you can give there would help. Thanks.

Okay, thank you. The first question on merchandise margin, our merchandise margin was down somewhat in the quarter, and that's a reflection of the pull forward of the marketing efforts and promotional efforts to try to smooth out those high-traffic days as we lead into the holidays. And it really included, as we've said in the past, strategic use of clearance, promotions on sell-down inventory earlier than, you know, moving to clearance, which is, you know, also helpful in terms of just managing our overall inventory levels. So that's the color on merge margin. And then the overall marketing efforts on the pull forward, you know, there's no perfect formula. for what the pent-up demand was from the second quarter into the third quarter. We've taken a view that we believe 20% of the second quarter at a market level, based on some research, has pushed into the third quarter, and we believe that is very much directed at bridal, as we've seen warranty improve as well. related to that product in the third quarter. So there's a little bit of dimension there, but as I said, there's no perfect formula. And then the other thought that I would leave you with is that as we pulled forward promotions into the third quarter, we believe that we were able to capture holiday demand and that the marketing investment that we put into the third quarter it did not limit the marketing investment in the fourth quarter. So we've been able to remain, you know, very consistent in our approach to our marketing efforts to continue to drive business in the fourth quarter.

Great. Thanks very much.

As a reminder, it is star then one to ask a question. The next question comes from Ike Burchell of Wells Fargo. Please go ahead.

Good morning, everyone. So I'll follow up to the pent-up demand type of question, I guess. Just on the 15 comp, outside of the pull forward of marketing and promotion, is there anything else you could cite or look to that would suggest a pull forward? And again, I don't know, but potentially a backlog of maybe repairs that were waiting while stores were closed that you got to fulfill. Is there anything else there to kind of suggest the transition from an up 15 to the low single in November and the slightly negative over Black Friday would be helpful?

You know, really, I think it's very much the promotional efforts that we put in place And the new product that we've been able to land working with our vendors into the third quarter, we were able to hold on Mother's Day for the second quarter, and we were able to land that newness in the third quarter. So I would lean into the product offering and the core product that is fresh and we're able to turn quicker. with all of our inventory management. And then I would also say that shift from store is another opportunity that we saw launch later in the quarter, enabling us to really leverage that opportunity earlier in the year. And that tends to, when it first goes out, it tends to have a bit of a push early, and then time tends to even out as the year progresses. So I would say those would be the additional factors I might mention.

Got it. And then a follow-up on the gross margin line. You gave us a lot of helpful detail on quarter to date and the Black Friday week. Any commentary on the promotional environment over that selling period? Just kind of curious how pricing has kind of acted in November and over the holiday weekend. And then Joan, last question, just on gross margin for Q3, I think you mentioned some occupancy savings, which kind of helped you expand the gross margin. Is there anything more to that? Is that abatement? Is that one time in some way? Just trying to understand how to flow through the occupancy benefits from 3Q as we think about modeling for Q and beyond.

Yeah, sure. So with respect to the price promotion over the holiday weekend, we believe we were very competitive there. In our positioning, we had a wide range of value offers to include the higher end product, the new brands that Jenna mentioned were also very well received and got strong response from our customers. I would say that in the world of promotion over Thanksgiving weekend, we were very competitive and we expect the promotional environment to continue. And I believe we're positioned very well to manage that through the balance of the holiday selling. And then with the store occupancy costs, the rent is really about negotiation. And as we renew our leases, our team, our real estate team has done a wonderful job working in conjunction with with our real estate developers and business partners to manage our costs and look forward to make sure that we're working towards arrangements that are very much in line with market and the current environment. So we're pleased with that. I would just note for you, Ike, that when you think of the leverage that comes off of a 15 comp, that's also something to keep in mind.

Got it. Thank you very much.

The next question comes from Dana Telsey of Telsey Advisory. Please go ahead.

Good morning, everyone, and congratulations on the progress. As you think about the different banners, Jenna, any commentary on performance by banner and how those performed? And then, Joan, as you think about the gross margin and also on the SG&A line, as you move through the fourth quarter and into 2021, what levers of expenses is there continued opportunities for reduction and where can we continue to see some merchandise margin improvement go forward? Thank you.

Hi, Dana. Thanks so much. You know, we don't give specific banner comp performance, but I will say a couple of things about our banner portfolio. So based on our assessment of the market, of purchase occasions, demographics of jewelry customers, psychographics, we have now begun to really tease apart our what our banners stand for. And as we focus Zales, for example, on a more style-oriented customer, both in the bridal category and in self-purchase, we're seeing some real strength on Vera Wang and our fashion lines. On Kay, as we've targeted that more toward a sentimental gifter, we see strength in bridal and in romantic gifting. Jared, we've been tearing up, and we're seeing strength at higher price points, and then Piercing Pagoda is typically our lowest average transaction value brand, and we've seen strength in gold, especially gold chains and gold earrings in that banner. The other thing I'll say is that we've been bringing significant new capability to all of our banners in e-commerce, and so we're seeing digital strength across all the banners.

Dana, with respect to your question on SG&A cost outs and, you know, margin expansion, we'll get the benefit of, you know, those things that we put in place this year that have a wraparound into 21, but the, you know, the future you know, opportunities really relate to the many investments that Jenna mentioned in her script, which is, you know, basically the flexible fulfillment, our new policies that we have around merchandise, trade-ins, et cetera, and just the better management that the teams have done, a tremendous job of bringing our inventory levels down should, you know, certainly be a positive for us. You know, we are also working towards Really understanding our inventory across all banners and leveraging back office, our size, and the commonality of some of the products to really help improve our core in terms of costing. And our vendors have been very supportive. helpful in, you know, working through that with us. And so we look forward to continued discussions with them. So, you know, those are just a few of the examples that I would give you on, you know, potential opportunities for the future. Thank you.

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

Thank you all for your engagement on our call today. As we conclude, I just want to reiterate my profound appreciation for our Signet team, for their passion, performance, and commitment to our purpose and our customers. The acceleration we've discussed today is a direct result of their dedication and brilliant execution of our Path to Brilliance strategy. And to everyone listening, we wish you and your families a happy and healthy holiday season. conference is now concluded.

Thank you for attending today's presentation. You may now disconnect.