Aritzia Inc.

Q1 2022 Earnings Conference Call


spk_0: thank you for standing by this is the conference operator welcome to a ritzy as first quarter fiscal two thousand and twenty two results conference call as a reminder all participants are in listen only mode and the conference is being recorded after the presentation they'll be an opportunity to ask questions to join the question que you may press star than one on your telephone keypad should you need assistance during the conference call you may signal operator by pressing star and zero i will now turn the conference over to holland kelly vice president of investor relations please go ahead thank you errol and thank you for joining your fps fourth quarter fickle twenty twenty or need conference call on the call today on joined by blind hell or founder chief executive officer in sherman jennifer long or president and chief operating officer and topping of you are chief financial officer follow management discussion will host the question and answer period open to analysts and investors i feel that remark on a common good our expectation future plans and intentions than a constitute forward looking statements
spk_1: did you the material impact of coburn nineteen on business up for the twenty twenty one certain references are prepared to net result in fourth quarter fickle twenty twenty have been included or management the to be a more meaningful measurement of performance the uncertain nature of covert nineteen and it's ongoing impact could continue to materially alter our performance who would prefer your our most recently filed management discussion and analysis and an annual inclination form which will include a summary of a natural assumption of bullets risk than doctor like an affect our future performance and our ability to deliver on the fort looking statements
spk_0: earnings release the related financial statement that and dna as well as an updated and does your presentation are available on feet are and the about religious website
spk_1: at our get account i will now when the call over to buy it
spk_2: regular own big you overdraw any of his afternoon i'm pleased alongside the jennifer and tried to share with your q one resent we've had a terrific started to scream twenty twenty two a multi channel business is thriving they are emerging from the pandemic of this game joke and ecommerce and accelerating failed remove state adding to are really strong do it for mental and the the last two weeks all or canadian boutiques are now reopen the most baffling restrictions coming off of the remaining fifty percent our canadian boutiques was coming friday with our entire business open our clients every word can now enjoy the everyday luxury experience whenever wherever and however they choose our future is bright and i could not be more grateful and proud of their extraordinary team as you drive forward together beautiful girl leveraging are wrong about him to structure and strong financial pollution to expedite investments a or for strategic drink drivers while total provide details on argue and financials i'm extremely player to share with you are outperforming satellite we saw revenue girl hundred and twenty two percent from one hundred eleven million last year to two hundred and forty seven million this year and twenty six percent from one hundred ninety seven million two years ago this was despite how hard can it be teacher remained close for two thirds of the quarter an ongoing capacity restrictions are open comedian boutiques in the united states or brand of enemy deep and wearing que one net revenues grew sixty three percent in us dollars from two years ago and two hundred and forty three percent from last year in our in commerce channel revenues continue the positive trend growing nineteen percent which we are pleased with given that during you and last year he commerce grew one hundred and twenty five percent was are dirty our clothes for the majority of the quarter in addition commerce mean of forty two percent of our business and que one compared to twenty percent of the same quarter two years ago more than doubling it's contribution we continue to fuel our surgery commerce goodness by elevating our everyday lives your experience digitally discord and we deliver numerous online enhancements and move forward on our only capabilities initiative ensuring your well positioned to launch the various army client services throughout this coming here to further than digital services and our booties we continue the rollout of our clientele out across all locations i am very pleased by the boutique performance as retail sales productivity and only booties return to nearly pre covered nineteen levels this was led by the united states or calm boutiques return positive single digit growth and our new booties continued to outperform expectations during the quarter the productivity of are open canadian boutiques further improve despite ongoing capacity restrictions suburban locations continue to outperform urban of the ongoing pandemic recovery across north america and the resulting in treats an activity in downtown course those well for the future boutique recovery turning a product or clients you spawn exceptionally allowed to our spring summer collection with expanded development in almost every category as restrictions ease and active with active social life story lifestyles return so as our clients desire to refresh and extend their wardrobes casual clothing continue to perform exceedingly well and as our clients enjoy reducing reduce coven nineteen restrictions we're excited to see increase performance and less casual fashion stars are strong in missouri division going into que one neighbor that to successfully capitalize on our clients enthusiasm and are sustain growth and e commerce and accelerating business in the united states it also rejected as from the well documented ongoing global supply chain disruptions as a result of the pandemics recovering at the end of the quarter or muntari was and forty four percent by design as our business continues to grow and supply chain challenges remain i have no rub eighty three percent as at the end of a queue for which would teach ugly helped to fuel our increase in sales and que one the remain confident we'll finish the season and a clean him to a position as usual in marketing we continue delivering captivating communications that seamlessly translated across all our channels and platforms engaging our clients and bran and feature focus campaigns throughout the launch spring and summer the big exciting opportunities and digital marketing we further invested in world class town civically and social media and in cancer where we developing strategies continue to capitalize on the tide against larry he remained steadfast in our commitment to been responsible for the planet and the people live on it this is highlighted in the corner with the launch of to incredibly successful capsule collections and supported our partner organizations and becoming a participant and the you a global compact as part of our overall fg strategy i will now trying to call over the jennifer or she was further disgusted and share perspectives and key areas or operations
spk_3: thanks fine and good afternoon everyone
spk_0: gelding on are strong operational foundation we are extremely pleased to see it on a mansion and added as the building blocks be put in place continue to heal eyebrows today i'll catch on for area in operation first an update on our distribution logistics and pontiac operation checking infrastructure investment to support future growth said are ongoing investment in college and finally our progress on e s g and brian noted disruptions related to the pandemic continue to reverberate through the global supply chain while we're not immune to the industry like challenge it arcane can continue to successfully employment north population and minimize the impact at noted on the last call we found that use that expedited freight to offset longer lead time caused by limited that and failing and in response to ongoing port congestion in our way we continue to redirect frank transferring are get through canada to i guess the in ohio effectively reducing to cancel delays i thirty to fifty percent
spk_3: our dc and logistics can continue to their exceptional performance in support of the increased demand during the quarter rdc prospect a record eleven million units
spk_0: we had a fifty percent increase in units take packed and shipped compared to pre pandemic level including a tripling of our economy in it if you've been in the distribution center the size of are you now that this level of demand can point real track an operation and required meticulous attention as inventory of coming in again process pick packed and shipped all at the same time every day found it carefully considered energy thief to and or the end of result were whether at that product arriving at our boutique or at the doorstep of our client deliver our everyday luxury experience are growing twenty years team kept pace with our v clocking in yea eight hundred thousand point interaction so far this year the be calmer of our largest boutique this team is the human connection to our brand when client shop on our it via dot com with a revamped organizational structure in place we are optimizing processes and evolving technologies of further empower our current year stylus and we elevate how we connect the service and delight our clients who shop online during the quarter we introduce dynamic roading to direct klein her actions to the right advisor at the right time to deliver a truly world class experience going forward were building up analytics and reporting capabilities to provide real time kp i have to drive overall productivity performance and job satisfaction for this important pain and revenue center you're out or it he had history we pride ourselves on growing infrastructure ahead of the curve to enable our growth our ability to meet demand in que one his testimony to the solid felt operational foundation to support numerous ongoing product expansion initiative and accelerated ecommerce grow we are expanding to of our three distribution centers as mentioned on our last call for we're adding fifty percent more usable space for vancouver dc when the middle of completing detail designed for with the targeted completion for spring summer twenty twenty two
spk_4: second
spk_0: i am excited to announce the in thor thing relocation and expansion of our dc in the greater toronto area at thirty five million dollars this will be the single largest infrastructure investment in our history or new dc will be five hundred and fifty thousand square feet more than three and a half times the size of our existing toronto d c this is the equivalent are roughly six and a half canadian football field our new facility will serve as the eastern half of canada and are growing volume of commerce orders in the us we will optimize cough and enhancer delivery time further leveraging what had become a core competency for as his mouth and project progressive i look forward to sharing more detail with you or ecommerce team is the busy they've ever been with ongoing up to my basement our client digital experience with improve five chart and product details upgraded check out and country specific content personalisation our technology team is working hard to enhance the enterprise why technology to support our growth we recently embarked on a number of project to upgrade our primary system including are pointed failed with them in retail are were help management for the are these the leave tomorrow product life cycle managed to thanks to support product expansion and continue to progress on our army capability including all of the key element to support the launch of door inventory visibility later this year as always i'm so grateful for the dedication and hard work of everyone on our team and a special shout out to though the busy behind the theme working diligently to needed are evolving did with the man all the while building the necessary infrastructure we rely on to support our growth as we look forward we remain acutely aware that are people are quite simply everything we are continuously investing in our came from training to workplace upgrade them more and we remain committed to developing or next generation of leader while recruiting top talent to arabia or people and culture kane is the laser focus on filling a multitude of key position across all area and all level of our do now we were delighted to welcome reigning champ to our with your family in jail which brine will be more to shortly from an operation standpoint we are partnering with their leadership team through a transition period this will allow our to take the necessary time to learn their business again if i were we can best leverage their strengthen our and to maximize business with all develop a comprehensive go forward can and and develop a comprehensive go forward plan
spk_3: as with all of our major initiative
spk_0: we have a separate integration team undertaking there in an orderly and thoughtful manner a focused on running our give them finally as brian touched on earlier we are very proud to have become a participant in the un global compact a part of our commitment to our ear chief strategy as diversity racial equality and social justice continue to be shared with i have a bold we remain committed to listening learning and taking action because we'll change starts from within we've been working on their from the inside out during the quarter we held internal education sessions on racial ally ship and and her even violin and celebrated pride with are king to our partnership with the stonewall community foundation we shared learning and council on how we can be even better allies and a positive change that each of us can amplify you are individual fear of influence in using or platform to give back and effect positive change we also launched three successful brand campaign we launched to cap for collection one in support of women and children in need and the other amplify when and voices and furthering progress toward gender equality and inclusivity in total we waved over two hundred thousand dollars
spk_5: and
spk_0: we shine the light on revolutionary individual who are paving the new path for the lgbtq i ate to as black community few our pride now proud forever campaign all of the campaign for thebes tremendous to respond and word friendly pleased with how we'd meaningfully engaged and deepened our connection with our loyal clientele in closing there's never been a more exciting time for our people as dedicated brand ambassador and are loyal client as we elevate both their world through every day luxury on now from the call over to talk to discover financial regal
spk_2: but it's over to the afternoon or won or strong performance in the first lawyer reflect are going around a bit early in the united states and the strength the my multi channel business
spk_6: for the first quarter we generate revenue have to worry a million dollars an increase of one hundred and forty two percent from last year and twenty six percent from the first quarter two years ago pretty good night you
spk_2: but this was despite the quarter thirty four would you think senator for over two thirds of the border a particular know so from severely than boutiques was essentially blocked the first quarter of fiscal twenty two hundred which are me the prequels ninety levels faster than anticipated us which is called positively to go to people with ninety levels while in the boutiques from canada began to build him and i'm despite an orange about the restrictions in the first were you ecommerce momentum continued in the first quarter as well as or strategic investments continued to pay dividends economists revenues were one hundred and four million ninety percent increase on top of the hundred and forty five percent agree in the first quarter last year of discern the pandemic went over to teach with last ecommerce penetration and the border was forty two percent more than double the twenty percent from the first quarter two years ago
spk_6: lastly are busy i do so acceleration of billed as or brand the believe continued to grow and the country began to emerge from and them it
spk_2: or us net revenues in the border grew two hundred and five percent from the prior year and fifty one percent when compared to two years ago in us dollars excluding the impact of foreign exchange net revenue grew two hundred and forty three percent and sixty three percent respectively please no i will compare those profit and of teenage to fiscal twenty twenty two years ago three hundred nineteen a little more relevant in comparison we deliver gross profit of one hundred and nine million dollars up twenty percent compared to eighty six million dollars in the first quarter of fiscal twenty twenty go from emerging was forty four point two percent in the we're expanding seventy basis boys from forty three point five percent two years ago you prove a nigger profit margin was primarily the beginning of the canadian dollar improved leverage on sore occupancy and lower markdowns bu games were partially offset by higher warehousing distribution center got to by the volume growth in our ecommerce business as teenage in the border with seventy million dollars of twenty nine percent compared to fifty four point four million in the first quarter of fiscal twenty twenty
spk_6: as you near the percent of net revenue with twenty eight point five percent in the border the rebate who point for quite a point seven percent two years ago
spk_2: and point increase was driven by continued investment in towns across ecommerce marketing and i t to support the future growth of our business as to i also included three million dollars an incremental come nineteen related expenses
spk_6: overall we generate forty one million dollars of adapted eat it on the first quarter or sixteen point six percent of net revenue compared to thirty five million dollars or eighteen percent of net revenue in fiscal twenty twenty
spk_2: considering we have three four vicky's close for two thirds of the quarter and continued covered nineteen expenses
spk_6: we're very pleased with these results image where he was one hundred and sixty five million in the end of the quarter and forty four percent from last year
spk_2: as a reminder er increasing your inquiry is comprised largely of strategic by than prevent dollars from our feature programs that successfully fueled our revenue growth in the first quarter and are driving our performance in the second quarter we ended the quarter with ample liquidity comprised of one hundred and fifty million dollars in cash and full access to the hundred million dollars under our revolving credit facility
spk_6: subsequent to the border we close the acquisition of seventy five percent of reigning champ a title enterprise value of approximately sixty three million dollars
spk_2: the initial seventy five percent or forty seven million dollars will be paid with cash with thirty three million dollar feta clothing and the fourteen million back to be paid over the next two years the remaining twenty five percent equity interest held by reigning champs management management shareholders will be converted into a red he shares in a had three and
spk_6: dollars for twenty twenty four to twenty twenty six
spk_2: we're excited about the acquisition and with the opportunity for men to become a meaningful part of our business another have been event which just call today is the refinancing of our credit facility extending it for years to fiscal twenty twenty six as part of the refinancing we repaid are seventy five million dollar term loan and at the same time increase or revolving credit facility from one hundred million dollars two hundred and seventy five million dollars the teacher the have access to the same liquidity and generate interest saving that approximately one point two million dollars per year today after the term loan repayment we are zero drawn on the revolving credit facility and have approximately one hundred and twenty million dollars in cash on hand looking ahead we are pleased with the sustain momentum in the second quarter to date we are on track to deliver second quarter net revenue of between two hundred and ninety and three hundred million dollars representing growth of forty five to fifty percent compared to last year
spk_6: or strong performance reflects continue to accelerate growth in the united states across both cows
spk_2: in addition to the ongoing retail recovery and the reopening of all a boutique in canada over the last two weeks we're also seeing the continued evening and restrictions across canada with ontario and start as the this friday while pandemic really the challenges aren't completely behind us we believe we are well positioned for the remainder of the second quarter given our strong performance today we raise our i'll look for fiscal twenty twenty an outback net revenue to be one point one five to one point two billion up from our previous kind of one point one one to one point one six billion for the fiscal year we continue expect gross profit margin to remain relatively flat to settle twenty twenty liters of a games in the first half resulting from libraries on a fixed costs and the strengthening canadian dollar will be offset by increased cost pressures in the back out from higher warehousing distribution center got continue to do that when and product allen and the impact of higher costs related to expedite afraid as dna as that percent of their revenue is expected to increase compared to physical twenty twenty accelerating that in people processors and technology are expected to more than off that the leverage on fixed costs keep contributing to and approximately seventy five eight point increase over fiscal twenty twenty
spk_6: in addition we've backing her ongoing ah brave and is relayed to call in nineteen are approximately nine million dollars for the year a further seventy five basis points
spk_2: reigning champ is expected to deliver twenty five million dollars in revenue and five million dollars and adjusted he did after the full year for reporting purposes we will fully consolidate reigning champs financial position and result from operations for only a month from the june twenty had polling day through to the end of the fiscal year and remove the twenty five percent non controlling interest from egypt anybody therefore and reigning champ is expected to add approximately seventy million dollars in revenue and three million dollar the they just believe it up for the remainder of our fiscal twenty twenty two these amounts are incremental to the and with the i'll look provided in summary were pleased with the strength of our business across all channels
spk_6: our product continued to resonate with our client or ecommerce is sustaining of momentum are you and business with accelerating and oliver boutiques are now reopen and performing on average i prevent namic levels but are strong galaxy position we're accelerating investment in our strategic initiatives
spk_2: we're excited about our future and are confident their history of on that the blind and track record and driving profitable girl will continue to religion as to deliver meaningful shareholder value
spk_7: that that are now care in the call back for brian
spk_8: and qatar
spk_9: and taught as garden
spk_2: me that a strong start to queue to which we kicked off with are multi our much loved annual summer sale the continue to the an acceleration of sail across both channel the united states as well sustained growth and a commerce business in canada and we're delighted with the me opening now of all our canadian the teeth and i had previously suggested as a result and calling nineteen people and change how they're going about doing things out of have not changed what they do socializing going out attending events and starting the travel again and they need fashionable everyday luxury product to do so are expanding product disarm and serves as well and we do that we're responding to increasing demand and will continue to do so in the future and among them and continue to evolve there are however ongoing impact as we anticipated while we could not be more cited by our results we're maintaining vigilance like all blow businesses they mentioned previously we too are experiencing ongoing supply chain disruptions expected carry on throughout the remainder the physical year were mitigating that through continue to teach a goiter management has proven effective our is jennifer mention we're meaningfully increasing our use of expedited frame ensuring we enter the fall winter see and a strong in the joy division building on the momentum bar because we're driving hard on are forced to teach it grows neighbors to continue to make meaningful progress first he commerce and army channel innovation we are capitalizing on are multi channel client relationship have the graphing are on the initiative and person i make no capabilities respect to launch during turned turn visibility come august quickly followed by by online ship and store and buy online pick out the star beginning roll out by the end of fiscal year second geographical expansion they remain on target job and think they knew the cases here and premier us markets and six expansions of the getting boutiques across north america additional deal under way already this quarter remote and of anger you to know the park california and we're very excited that open the ground arteries be teaching was hauling california later the they're also planning for a superpower see world pop up in teeth in time for a fall winter season come august the first reopening in the heart of new york and the second boutique okay on iconic narrows ave los angeles there and brand awareness and customer expansion they're capitalizing on growth opportunity than the united states including the ongoing build out of are paid media program and are developing bowl their customer acquisition retention strategy and foreign product expansion were meaningfully expanding our product lines by progressing with the development of new categories extending our depth and widening our breath but the last few decades while we consider next dancing the men's they've always maintain it is in focus on a woman's business our when the opportunity to acquire reigning champ is presented earlier this year it was too perfect pass up as i mentioned on the and and is called the time of the acquisition although there are concentrated in the synergies this isn't a cost saving exercise it is a revenue growth opportunity we look forward to capitalizing on a world class operation expertise and infrastructure as name's merchandise independently will become a meaningful parlor riches platform and correspondent growth are emerging from the pandemic content an ability to consistently glitter profitable growth that mention that by the continued acceleration and failed they had stayed and sustained ecommerce grown will be supported with ongoing investments for strategic infrastructure including the recruitment of target a world class town continuously optimized process is meaningfully and technology and the significant expansion of our distribution network i remain deeply grateful for our people that wavering commitment to read fear and our claims and during loyalty to our everyday lecture experience i could not be more excited about our future
spk_1: thank you
spk_0: elvis atlas up on the line or question certainly we will now begin the question and answer session to join the question here you may press star than one on your telephone keypad you're here town acknowledging your request if you're using a speaker phone please pick up your handset before pressing any keys to withdraw your question please press start and you will pass for a moment as college during the key
spk_10: you our first question come from mark up slugger have fared please go ahead a good afternoon and congrats some of the continued momentum here
spk_2: so on it's great to hear that all the boutiques are reopen in canada and i'm curious how are you thinking about pent up demand with the stores now reopen a they if it seemed very effectively capture demand in your digital channels through this period of disruption some trying to think true know how much incremental growth you think you could see from here in the coming corners versus perhaps is more of a normalization with families channel dynamics then start up as as a little here that actual numbers he has any bad you know age it too soon to auto in the oh good canadian stores yellow canadian stores that were open have a canadian stores in the west the challenge we had a said they will stay stayed open during will times oscillating up and down cold in nam numbers of people felt comfortable i'm not comfortable uncomfortable not comfortable and so there wasn't really definitive sort of spikes in a calm as business businessman people tell less comfortable and vice versa so was pretty hard to to judge then so bar with on terror reopening we think we probably get a pretty good read that we're not really going to get a good read until to be the answer that question until a stores get open to figure out how much as actual incremental vs not sell a lot the stores are open till they get full capacity starting as friday so you know i
spk_10: i don't know we have an answer todd you a feel for that yet i did too high i it is it is too early
spk_2: a on it too early to and that that low we had seen and stage is our stores reopen and are you commerce business continue to grow from this from last year so we're we're hoping that the same are bird bird are cautiously optimistic the same things can happen here in canada and that is not that helpful and then and separately a you guys pulled back on your typical fail period i think in that the first half of the the calendar year here i'm curious how you thinking about they'll events and promotional strategies up with for the back half relative to what the company has done a historically
spk_11: so why we're thinking yeah we we we lost our regular lighten up sale in the spring i'm not sure we're going to have heard regular later on sale methodical determinable and had that a will have to do little bit to do with how our strategy and sales strategy that also will supply
spk_2: hm disruptions now businesses and how much inventory the have so we're going to be monitoring man this we delayed are our a american sale going early prior to him on memorial day to the beginning and jane and dad were going to continue that that damn you're not gonna we're not going to go back to to of going to change that for a decade now so that's now fixed bad
spk_12: you know i i think that it's complaints here one is
spk_13: the are our marketing department feels and we're talking about sale little too much
spk_0: but the product of our needs to add failed to clear out into a and we had a addiction and are easier to starting human
spk_14: greedy clean and tory mp always will try to do that so
spk_6: you know maybe the solution decoupling inhabits continue in a different same period in there is tail periods but have marketing speak to them passing so we've been debating that have laid back to our objectives to be on sale at a loss of he had been and past and so we're in a sort of figure out and and trying to navigate that to since
spk_15: see how that manifests
spk_6: okay thank you for the decompiled come back to give
spk_2: our next question comes from mark petrie sci i b c please go ahead it's been a good afternoon it just that you know what to ask about the differences your see between the canadian and us markets and separate from the differences and opening restrictions have you observed any differences in sort of consumer debate demand you know what what people are actually buying and that have any implication about how you plan a position for upcoming season you know i think as a good question is is going to be interesting to see because we've all seen the pictures of celebrations and in festivals and music and get togethers and the as dave some in i saw a two months ago on the video that just blew my mind on and he goes vegas poolside sleep yeah he didn't look like code ever you and existed let alone even have and sell with old he will out how canadians react to that our senses is being less euphoric response to to commit or maybe we'll just a little more cautious here i don't know so your guess is as good as mine on what's gonna happen there is far as a product goes around in a week we always did have a grain
spk_16: makes a product and that's when things we've always been was proud of his is not just through the department and either though the the various products types teachers blouses sweaters jackets dress codes whatever
spk_2: he also across and having different product for a customer and her her needs whether she's going to work when the she's going out whether she's hanging out on a weekend whether she's exercising whatever we always tried to have be there for her be guard listen let her activities and when cold winters here we saw and definitive drop immediately and go how close as well as professional where we've seen a rebound and now in the going out where the we haven't seen a rebound in the professional were quite as much better time will tell and we'll see what gets mandated come fall and now we're we're
spk_17: we're optimistic the people didn't want a refresher wardrobes regardless of whether have to snow you can we haven't really got a good read on the us vs canada but dad's a little bit has to do with the seasons two people aren't don't typically dress up in the same manner in the summer in their bit more casual and a little less clothing so will be able to answer that question a little bit more or next earnings call activity reaction to her fall assortment better
spk_2: rob domestic bed that people's or drugs are going to be going back to normal here and how they had previously purchase and and as i mentioned were set up at or it's he had to do whatever it may be whenever whatever way the wind blows here on and clothing and what she wants or are therefore
spk_17: yeah okay gags and i guess just following up but maybe it was suddenly separate topic the i'm just curious maybe it's difficult to answer given the of the pandemic got a there any difference in how the canadian consumer or the us consumer has responded to your efforts around additional colors types and sizes or is it pretty consistent across the to markets
spk_14: it's pretty consistent across to market some you know
spk_6: what we're gonna see some differences i'd say game in that color particularly come fall and winter in the united states where the have a lot of growth in a in the southern united states but up to this point and it's been pretty consistent reactions be been very positive both in canada and united states
spk_2: okay and then my more if i could get on a deeper chart i'm not sure but i guess just generally you know is obviously a lot of for tea cakes on margin but fundamentally at the vagueness exit the pandemic has the underlying profitability of the business shifted giving it changes and product and geographic next are other factors mean you highlighted some you know relatively meaningful as she and
spk_6: it costs you expect this year
spk_2: but presumably that that that layers out over the course of time but i'm dee think it did not accept the pandemic fundamentally different from a profitability perspective
spk_17: no and no we didn't i
spk_0: there we're still out as i discussed it experiencing encoded related expenses that are are material and and we've made investments overlap two years in in our people and in last year during a pandemic we continue to advance as we we're gotten that here and and
spk_2: nolan batman in i t and ecommerce in marketing they will all generate i will we feel is a paved growth in the years ahead and so no we don't believe there's any fundamental shift and go having said that as our business grows in in the united states and that becomes a more meaningful part of our business is especially the calmer off and yeah we've talked about that that quite a bit and that that is our our most our highest margin towel and the most secretive as so ill as it as that continues to grow and we do expect in margins over time will will expand from that dynamic understood for shit all the comments and all that our next question comes from derek galley of can a quiet please go ahead yeah i think one i would just wondering if you could talk about the how you envision not a new starting to see that immortal reopen across the board here the mix between commerce and and brick and mortar stores and yeah i guess more than a curious in terms of you plan to in the das to be calmer strategy you are offering more so i did that really stood out more small long line person in this or i on to the managing comics yeah i mean our stores have been getting bigger over the years and they continue to get bigger and and i'm a lot of the stars are opening now the and the girl rebound and and isn't particularly large but some of the stories were been opening have been meaningfully larger than than we have in the past pastime it's helping us we have some expansion team in canada with some flagship opportunities that we're expanding as well so from a child's perspective our stars are getting bigger than they are not in any way shape or form keeping pace with the growth of our product on line so whereas our stores or her are growing in our our average storage sizes growing ten percent a year because we have a hundred stores that are not growing particular nasr getting the position are better product mix is going far faster than that should settle
spk_18: you know we don't have any stores now that whole house or whole product to sort of as we continue to expand and colors sizes length and other categories are stores are not a new older product to have be a little even less massive percent product but that's fine because we have a robust commerce channel and that's another benefit
spk_2: it's a be congress's and he can sell as much as you warehouse can can hope and a distribution centers that's why jennifer is embarking on a big expansion or distribution and are great and to accommodate the expansion of her product specifically on i you know the stores we been pleasantly surprised at how they ban and back we don't know this is just pent up demand or this is gonna continue don't know at this point in time sort of the high class problem wondering whether your stores will come back down to earth and we predicted been on i think that you know that the stores and number position of the stores although their profit centers for original always a lot of product in our stores and other all the story starts to change and it's about the the the presentation of your brand and experience a customer has and setting that up in real life
spk_19: vs online so i think it's a combination of i will continue to say i were extremely well positioned having world class retail and world class e commerce and we think that's a the strategic advantage for it's him particular built today and going forward so we don't see that changing so
spk_2: when you know they they expansion of our product launches and sizes and shapes and colors and flight that how categories also expect a lot of an expansion will occur on i'm only
spk_20: okay well that's really helpful and then just one more disenchanted the each station it's that their the distribution centers and your genitals on by dallas for elementary palmerston in eastern canada and the us market but arm is already update on on an international strategy beyond north america or it is
spk_2: it's too early to ask that question yeah
spk_14: you know we we herbs really focusing on the international
spk_0: a few years back any sort of dawned on us and and are better off looking at the the low hanging fruit of the united states which is right there and that's one of the reasons or businesses grown so fast the last twenty four and twelve months is through adelaide are concerned the since the patch since last year is due to the fact that we focused on the u s in the us is driving growth rate so in a will
spk_2: the are you are international certainly back on our radar now on am in there certainly are putting strategies to get him to continue to grow our international but i focus is still firmly in the us is a huge opportunity for us there and continue to explore that while we can better the international certainly add back on draw on both parts per se and thing as tragic somehow and to okay great thank you very much our next question comes from irene cow of rbc capital markets please go ahead thanks and good afternoon everyone just kind of thinking about the conversation that's been happening so far as i guess the first questionnaire the obviously isn't expand the offering both in terms of categories and charge of sizes colors at catcher and
spk_21: effectively communicate that ah to your just in customer base extent that a lot of audience going to be available online surprise in store
spk_2: bob hiring thank you for that question he i think there's a there's a matter of yeah with calories anything like that are we are going to start promoting color in general there's a lot of our competitors promote color out there right now and so we're going get more than you start probably spending a little more time the golden color on you know i think for sizing perspective and like perspective
spk_1: we have just we we don't have size in in length in all or styles of the moment it's been successful
spk_0: wilmer in a position and we feel confident and beacon
spk_2: wow ah a promise to our customer the and sizes in lakes are there and deliver on knows that to will probably start speaking about a little bit more it's gonna you are pretty simple he ever will bust a direct to consumer communication channels we have social media we had on her website so it's gonna be pretty an amnio to see have any testers it's gonna be pretty simple to communicate that we'd is wanna make sure that we're comfortable with the line
spk_22: offering besides size offering and some of these other offerings and then i think try and new product category perspective ending the customers are going to be a little seen it going to be voting those has a luncheon so i don't think it's gonna be any secret anybody these is product like they can be quite simple to communicate that leaves out to make sure that we ever taxes all lined up a pretty comfortable before we start communicating too much about it
spk_1: that makes a lot of sense thank you grind and then she should continue the discussion about said potential impact of all of that you know if we go back to your pre how that you on this great trajectory of let's call it in a mid teens cuts or minus many giving or shirt topline grout
spk_0: but is it reasonable price to think that over the next several years as you do lunch so many these initiate as that we could actually feel acceleration in that top line growth rate
spk_2: you know where i'm in a jennifer's always reminding got time to myself to to a plan for the worse and hope for the best so we're planning that same level of growth we're hoping that will grow and we may see some some more robust growth as well and are certainly setting ourselves up for than harm by were planning are being conservative and are planning and make sure that whatever is at work or planning for is something that will you be feel pretty comfortable because there's a lot of moving parts whether be distribution center site i t systems and counts all sorts of income
spk_1: we don't want to be sitting here coming to to to you and one day when does the dollars in sales and proxy it's a bargain conservative than fan
spk_0: on how we we plan everything and an hour or okay gonna set are so we're gonna set ourselves up and hope that be a will achieve some higher growth rates for sure
spk_2: okay and then finally love consent or on this topic i promise and you know a again just continuing to check think it's trail in you've been investing in all this tower which is great it's enabling you to do all that stuff and what's your presumably at some point and ladder know if it's sheer some and to in high to put a pin and but we should she hadn't circle at more of a conversion in turns out are we should teach shirt i get some as she that and eight grow into the sale flat out is that a way to think about it yeah yes i mean exactly and here and i was answering tomorrow that that's exactly how we're looking at it and that here is still being pressured again by that expenses and and then and two years worth of ah growth in our or investments in are people that will contribute to outpace growth in the coming years and joke be fully expect he'll return and then i'll likely exceed our our previous version levels that's that's very helpful thank you i'll i'll get back and keep bank our next question comes from stephen mcleod a be ammo capital markets please go ahead by thank you good afternoon lots of our lots agree ground covered so far but i just wanted to follow up on to save the first one was god brian you're prepared marshy talk little bit about your investments in social media influence influencer
spk_23: dad type that marketing can you elaborate a little bit on what those investments might look like is the magnitude material and are these more focused on specific offering specific products or more and more broad base and from the brand building
spk_2: i think for all go backwards your i think the combination of said products of we have specific products to promote and brand building on cases of don't lb you know we have been doing some in the past we've brought on some people now i am keen to to kind of read greenery or strategy here
spk_24: overall in those areas i mean be brought ensemble social our we're returning robot social platform night now and the perfect know we have olds and and yes
spk_2: can be doing better yes but and we have extremely high gauge her instagram people and places like that i got similar in the top quarter sell i'm ah so i've been told in your spine and the
spk_24: the know we're we're waiting for his tragedy brought on some in the trash annals here got a lot of experience in this area
spk_2: we'll thought that he knows talk it's his his campaign or frank power and and slightly for no reason to the line and instagram allowed last for a while there are now ah not a smart enough and is becoming spencer there and and the algorithms have been changing and things so the yeah to get away with to get through customs
spk_6: a good thing i do know is that is so short
spk_2: and game changes fairly regularly and involving a system so it's important that you stay at a pet of that because he could that strategy least three you have to stretch so we're always read looking and looking at this and he have some professionals now come in i hadn't seen sort of the next generation of put our strategy is but i'm hoping see you next few weeks and and go from there to see it okay that so that's great thank you i'm and the maybe i'd want this following up by tall on something the last cautioned you you're talking about with respect as treating law bridge on you know do is the way to think about where we are today that you know this this as una the the impact for me investment investments as well as in august he called it will be isolated to this year or presumably but in terms of the as junaid that you're taking on to to were to support some the lessons that you've made you expect that to continue to way like and he to the next fiscal year or it too soon to challenge is trying to get incentives to know when you expect to act or laggards oldest you know investments in a more material life yeah i came home and get a good at a tough thing to do is just you know their dad and we've been to disgusting for like the last twelve months or maybe even a team were planning to provide a realize multi year plan which will obviously include the the projected revenue growth as well as and are margin expectations and we're we are still and targeting to do that the fall and by the own obviously need to ensure will lose business continues to normal idea is over the next two to three months and so i think i would leave it til then and by a as i said we expect or margins go or hundred or even i'm will return to preclude levels overtime and and then growth grow beyond that al qaeda that that's helpful that's great for understandable that are negative findings with respect the reigning champ i know you're in the early days of ownership but i'm just curious what kind of an industry feedback you've got in on that acquisition arm and maybe even potential ally client quietly doctors law
spk_19: defeat her as an interesting question last half
spk_0: are we haven't i had all the climb feedback haven't the gonna made it's way up to me in canada only i have friends and people with and a graduate anybody from an industry perspective begun a lot of great feedback i frown
spk_1: ah people we do business with prospective employees and senior employees that are coming on super excited about it internal employees poison are super excited about so be guns and really great feedback and the good news has been as well as said time creating a team from reigning champ received multitude of feel positive feedback from their company and there's there and the industry both ends where in the street or industry so i think a lot of people felt this was a really great arrangement and up to this point time it's early days as you mentioned bad
spk_0: we can be are thrilled that
spk_1: how are going about the integration everything gym enchanted by his hand and orderly as well
spk_25: you know talking craig couple times a week and alright well to do and
spk_26: some the chefs we've already made and
spk_3: you know i think it's a it's can be a great great a partnership here going forward
spk_1: right now so much our next question comes from patricia baker at scotiabank please go ahead
spk_27: i thank you very much into that can anyone jennifer i wonder if to talk a little bit more about the b be you know that for largest party in the company wants to an incremental capable capability that will come to keep them happy
spk_2: the thorny apart from the fact that it's going to do in on ah three times larger than getting the movie and when and big functionality that will mean and offered by also i think as will be a little shit cross border and distribution and if the right now in shape craft what i found my vancouver dave see anger from very interesting that difficult to do that like the three p other than right now so i think that well and that point out a kind of volume in particular that to have enough functionality in a crash a cross border will be at a big game changer for and then in addition to that we are now exploring ng various and
spk_28: various levels and automation that might make it and more cost effective all their what we have found with i believe in being that to unit and why and had been here in a highly personalized packaging and might not get and if it were a level of automation mom will be very they nemo
spk_0: and in comparison to say an an amazon i am but other than that i think the and fine having control by in it on the on the a game changer no absolutely thinking and then just laugh when i was expected to one another any particular product boom in the corner
spk_1: you know i think we've
spk_0: one we've seen marcel and q why in a continuation and que to is

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