Chico's FAS, Inc. (CHS) CEO Bonnie Brooks on Q1 2020 Results - Earnings Call Transcript
Chico's FAS, Inc. (NYSE:CHS) Q1 2020 Earnings Conference Call June 10, 2020 8:30 AM ET
Bonnie Brooks - President and Chief Executive Officer
David Oliver - Interim Chief Financial Officer and SVP Finance, Controller
Molly Langenstein - Incoming CEO and President
Conference Call Participants
Susan Anderson - B. Riley FBR
Roxanne Meyer - MKM Partners
Janet Kloppenburg - JJK Research Associates, Inc.
Marni Shapiro - The Retail Tracker
Good morning, and welcome to the Chico's FAS First Quarter 2020 Earnings Conference Call and Webcast. All participants will be in a listen-only mode. Please note, this call is being recorded.
I would now like to turn the conference over to David Oliver, Interim Chief Financial Officer and Senior Vice President - Controller. Mr. Oliver, please go ahead.
Thanks, Rocco, and good morning. Welcome to the Chico's FAS first quarter fiscal '20 earnings conference call. Joining me today are Bonnie Brooks, CEO and President; and Molly Langenstein, Incoming CEO and President.
Our earnings release issued today can be found on our website at www.chicosfas.com under Investor Relations, Press Releases.
Let me caution you that today's comments will include forward looking statements about our current expectations, assumptions, plans, estimates, judgments and projections about our business and our industry, which speak only as of today's date. You should not unduly rely on forward-looking statements.
Important factors that could cause actual results or events to differ materially from those projected or implied by our forward-looking statements are included in our earnings release issued this morning and in our SEC filings. We disclaim any obligation to update or revise any information discussed in this call except as may be otherwise required by law.
And with that, I'll turn the call over to Bonnie.
Thank you, David, and good morning, everyone. Today’s earnings call is the antithesis of our last earnings call just 13 weeks ago. In our last call, we beat every consensus metric and we reported our best quarter in 6 years for the company, a remarkable turnaround at 9.4% sales improvement from Q2 to Q4 last year.
Today, our story is very different, but is a story that is also very temporary. Although our results for Q1 have been cohorted by recent events, we want to emphasize that the set back is a temporary one on our turnaround path at Chico's FAS.
I'd like to start today by recognizing the exceptional effort of all of our associates who are demonstrating their resilience and their resourcefulness every day. Many of them are now working diligently to reopen stores across the country, while following strict guidelines to keep our teams and customers very safe.
And the many team members in our distribution centers who have ensured that we continue to fulfill the strong digital demand across our three brands today and throughout the course of this pandemic. COVID-19 has had a significant impact on the retail apparel industry, unlike anything ever experienced.
It has affected the communities we serve and the company's financial performance. While we have posted unprecedented losses in Q1, we have taken extreme measures to ensure we are well positioned to overcome the challenges that this extended period of store closures has had on our business.
We entered the pandemic with very low debt and with strong sales momentum due to the significant changes we made to the entire business in the latter half of 2019. That positive momentum along with the foresight of major digital investments, our exceptional customer loyalty, and our restructuring of the operation have resulted in the company's ability to withstand the pressure of the unforeseen plummeting of sales.
Through the first quarter and now well into the second quarter, we have stabilized the business and achieved a firm financial foundation, we know positions us well for the balance of the year. Chico's FAS started fiscal 2020 with strong sales momentum.
Consolidated comparable sales trends showed continuous improvement throughout all of fiscal 2019, and of course that continued into February as we achieved a comp increase of 2.7% and similar results continued into March prior to the COVID-19 outbreak.
At the start of the pandemic, we swiftly safeguarded the health and well-being of our associates and our customers, while simultaneously protecting the financial strength of the company. In mid-March, we transitioned to a remote working environment for our corporate and store management teams.
We temporarily closed all 1,341 boutiques and became a digital-only business overnight. Associates at our distribution centers continue to work with enhanced health and safety protocols and wage premiums to support our strong digital business.
During this mandated store closure period, we took decisive measures to increase our liquidity, and reduced our cash burn to provide the company with greater financial stability. In Q1, the teams reworked all forward receipts [ph] to better align our inventory with expected reduced demand.
We entered the second quarter with a streamlined expense base and strategies to further enhance our liquidity, giving us confidence, we will emerge from this crisis well positioned for the second half of 2020 and beyond. We continued to right size the operations of the business in Q1, work that had begun in Q4 of last year. This included consolidating brand responsibility, streamlining our supply chain, and driving customer engagement through improved technology tools to increase efficiencies and allow the company to move faster and more effectively.
We are fortunate to have three distinct brands, each with unique market position and three different product ranges, which has continued to serve us well during the pandemic as sales have increased across some categories of business while decreasing in others.
To meet the more casual work from anywhere needs of customers, we accelerated the rollout of new merchandising and marketing strategies that were developed prior to COVID-19 and reworked our assortments and plans to drive sales into those wanted categories of business, mainly work from homeware and casual comfortable clothing at both Chico's and White House Black Markets.
With Soma's leading position in [indiscernible] sleepwear and loungewear, the brand performed solidly throughout the quarter with strong sales in all comfort and casual categories that they are known for, which achieved double-digit increases in sales during the same period versus the prior year.
Actually, in many weeks, Soma's online-only business generated similar sales volumes to its total business in those weeks last year. Soma also delivered a new single day sales record during one of the promotional events, leading the highest single-day sales record in the brand's history.
As demand shifted to our online channel, it was critical to align investments in digital to mitigate the declines in store traffic during the closure period. Our store management continued to engage with customers through handheld devices equipped with Style Connect, our proprietary digital styling and selling tool. We believe Style Connect will continue to be a strategic competitive advantage as it allows for intimate distance connection in a meaningful manner that is clearly resonating with our customers.
In early May, we initiated our multi-phased reopening plan, particular for Chico’s, White House Black Market, and Soma boutiques in line with guidance from local authority, and we are taking the necessary steps to protect the health and safety of our customers and associates. We are encouraged by our customers’ response to our reopening as they are increasingly reengaging with our boutiques which remain an integral part of our omni-channel approach.
As of today, approximately 63% of our boutiques are open to the public with limited hours and enhanced safety protocols, and 80% of our total fleet will be open by Friday. Since beginning the phased reopening of our boutiques, we are seeing excellent week-to-week increases. I do want to note that as a result of recent protest, we have experienced some additional temporary closures of those reopened stores for limited periods.
In our initial phase of reopening our stores, we were able to fulfill national digital orders through our boutiques using the store's inventory. We also offered Buy Online Pick Up in Store, no contact curbside pickup, and a shop-by appointment service for all brands. These shopping options continue to be available to customers in accordance with our local health and safety guidelines.
Although the past few months have been unlike anything we've ever seen, I believe our company is successfully navigating the challenges presented by the pandemic, and we are emerging stronger and nimbler. The agility of our associates, the continued enthusiasm from customers for our brands, the financial foundation we now have in place, and our significant cost saving measures have positioned us well at Chico's FAS.
As announced several weeks ago, Molly Langenstein will be stepping in as CEO and President in a few weeks, and I will become Executive Chair of the Board. I am confident that Molly is the right leader for Chico's FAS. Molly's experience as a strategist and her proven track record as an apparel merchant were very instrumental to the company's recent turnaround.
She also has demonstrated throughout Q1 that she has the steadfast leadership skills required to steer the organization through extreme obstacles. I am confident in the months ahead, Molly will continue to drive the successful and proven strategies that we built and implemented in the prior two quarters.
I will now turn the call over to Molly to discuss the sales, inventory and operations in more detail. Molly?
Thank you, Bonnie. Good morning, everyone. I'm pleased to be speaking with you today as incoming CEO and President of Chico's FAS. I want to thank our associates for their unwavering dedication to our customers, community and each other. The decisive actions of our executive team and the agility of our associates allowed us to quickly pivot to a digital-only business that supported strong online demand.
While COVID-19 significantly impacted our business in the first quarter due to temporary store closures, I am confident the momentum the company gained in Q4 of 2019 will continue, once we fully executed our store reopening plan and customers return to our physical stores.
To date we've opened 63% of stores in accordance with state guidelines and each week we have been pleased with their performance. Boutique sales are improving week-over-week, and Q2 sales are planned to be better than Q1 even as we operate with limited store hours and social distancing guidelines.
As we look to the balance of 2020, I am confident in our teams and the actions we're taking to bridge the momentum we gained in Q4 to work we're executing in Q2 and beyond to ensure our company's strong position in the marketplace.
During the pandemic, we took an appropriate inventory write down on out of season inventory that had been trapped in our boutiques during the closure period. As a result, we entered the second quarter with a higher level of seasonally right product, less prior season inventory and a much better composition.
The apparel assortments arriving on our site and in our stores reflect the assortment editing and category investment work our team previously implemented. At Chico's, our pre-COVID merchandising adjustments, which included a shift to more casual products served us well during the pandemic as we successfully leaned into the above keyboard goods, such as wovens, knits, tops and sweaters.
Our White House Black Market brand began transitioning to more casual work from anywhere offering, like our Jetsetter T, casual dresses and accessories. The more versatile assortment with elevated fabrication and designer influences resonated with customers during the store closure period and we are seeing a continuation of assortment strength across tops, denim, jackets and accessories.
With our pivot to digital, the newness we added to the brand website each week increased customer engagement with all three brands posting double-digit increases in online traffic in the first quarter. In April, when our boutiques were closed, we registered double-digit sales growth. Importantly, each brand registered double-digit growth in new customers, expanding our loyal customer base. This momentum is continuing as we reopen stores.
After identifying our talent gap in digital last year, we recently hired a new Vice President of Digital Transformation with a proven track record of implementing digital initiatives in the apparel industry. In addition, Style Connect, our proprietary digital styling tool continues to be a differentiator for the company as it allows our customer to receive personalized service wherever, whenever and however she prefers.
Our customers who are uniquely loyal to our sales associates registered triple digit sales increases versus the prior year in Style Connect. And to meet the customers evolving outfitting needs, we accelerated the pilot phase of a new online tool that enables them to digitally shop and augment their closet. We look forward to sharing initial results on the next earnings call.
With the onset of COVID-19, the robust forecasting process we built last year allowed us to more accurately plan receipt flow for each of our brands and as a result, we swiftly cancelled products in the pipeline and continue to reinvest more deeply in key items that resonate with our customers. The product and assortment architecture we built for each of our brands remain firmly anchored on placing the customer at the center of our decision and we will continue to inform our go-forward strategy.
I am confident that we will see the benefits of our disciplined approach. Over the last few months with the majority of our organization furloughed, our team seamlessly adjusted to working remotely, while achieving all milestones in our product development cycle. We have an outstanding team and the breadth and depth of the new disciplines in the organization and the new speed to decision model will serve us well going forward. We continue to see a great future for Chico's FAS and I look forward to leading this dynamic company.
I'll now pass the call to David Oliver to discuss the financials. David?
Thanks, Molly, and good morning. Before discussing our financial performance, I would like to review our liquidity position and the actions we have taken to reinforce our financial strength. As a result of these proactive measures, we believe that we are well-positioned to support the business and navigate the current environment.
Chico's FAS entered fiscal '20 on solid financial footing and continues to maintain a healthy liquidity position. We ended the first quarter with $118 million of cash and cash equivalents. We believe our cash position is meaningfully strengthened by availability under our asset based credit facility and our ability to borrow against our own real estate, including the Chico's distribution center and corporate offices that are unencumbered today.
As Bonnie noted, we have taken steps to align our cost structure with revenues, preserve cash and increase liquidity. To improve liquidity, we drew down $106 million on our credit facility and then began aggressively reducing SG&A expenses, starting with an organizational restructuring, furloughing associates and temporary wage reductions.
We also adjusted planned merchandise receipts to better align with expected market demand over the balance of the year. This effort included partnering with both merge [ph] suppliers and other vendors to materially reduce operating costs and extend payment terms.
Other notable actions to reduce -- that we took -- we reduced our capital spending -- planned capital expenditures and our non-essential maintenance expenditures. And we also suspended our quarterly dividend, which we anticipate will conserve approximately $31 billion in cash this fiscal year.
With malls and retail centers temporarily closed and stay-at-home orders in place across the majority of the markets, commencing in April, we suspended rent payments and recently engaged a third-party to assist with restructuring our lease portfolio to obtain rent relief in the form of rent reductions and rent abatement and other concessions that are aligned with the expected sales environment.
We are in active discussions with our landlords to find a mutually acceptable path forward and we are targeting meaningful savings from these efforts and expect to have more to share about our real estate throughout the course of the year.
With regards to the CARES Act, the company will realize meaningful savings and added liquidity from the provisions of the Act, including benefits from recent tax filings, primarily related to the recovery of previously paid federal income taxes, as well as the deferral of social security tax payments, employee retention credits and technical corrections to tax depreciation methods for qualified improvement property, among other provisions.
Turning to our financial performance, the quarter started off strong and showed continued momentum as a result of changes that we've made in our merchandising and sales initiatives. For the first four weeks of fiscal '20, consolidated comparable sales increased 2.7%, building on the strong performance we reported in the fourth quarter. However, COVID-19 related store closures and stay-at-home orders significantly impacted sales and results for the balance of the quarter.
From most of the quarter, our brands operated as a digital-only business, but digital traffic and sales achieved significant growth. However, the positive digital performance was not enough to offset the broader disruption in the quarter. Net sales were $280 million, down 46% compared to $518 million in last year's first quarter. This decrease is primarily due to the impact of a nationwide store closures during the second half of the quarter. Additionally, since last year's first quarter, we've permanently closed 84 stores.
For the first quarter, we reported a net loss per share of $1.55, reflecting the impact of $177 million in pre-tax charges, all of which were non-cash. $113 million of the charges related to the impairment of goodwill and other intangibles, $43 million in inventory write downs and $21 million in-store impairments. On a after-tax basis, the first quarter impact of these significant charges was $135 million or a $1.17 per share of the reported $1.55 loss per share.
Gross margin in the first quarter was negative 4%. This decline in gross margin reflects the previously referenced $43 million inventory write-off and 23 -- $21 million in store impairment charges as well as sales deleverage of occupancy cost with the temporary closure of our stores. We believe the $43 million in inventory write-off appropriately addressed aged inventory and leaves us with current or new inventory that is customer relevant at the end of the first quarter. The referenced inventory write-off and the store impairment charges reduced gross margin, $64 million or 23% of sales.
Maintained margin in the first quarter was 46% of sales. This decline from a more normalized rate in the low 60s was primary result of the $43 million inventory write-off we took in the quarter. We exited Q1 with total inventories of $273 million compared to $242 million at the end of last year's first quarter.
In an effort to minimize excess inventory, in light of the COVID-19, we adjusted merchandise receipts to better line with expected market demand. As a result of the actions taken, the company expects to sell-through its current inventory does not believe there will be significant inventory write-offs over the remaining three quarters of the fiscal '20.
SG&A expenses for the first quarter were down $55 million compared to last year's first quarter, primarily due to the actions I discussed earlier to align our cost structure with current and future sales expectations. For the first quarter, the effective income tax rate was 30% compared to 63% for last year's first quarter. This year's first quarter tax rate reflects benefits provided under the CARES Act slightly offset by the company's goodwill impairment charges and share based compensation expense.
Regarding store openings and closures during the quarter, we closed nine stores permanently and then no openings. For the remainder of the year, we anticipate an additional 50 to 60 permanent store closures. In light of the pandemic we intend to reevaluate each location's future viability and will modify our closure plans accordingly. That said, stores are a critical part of our future, but they must be in the right location, be the right size and have the right economics.
Our cash flow in the first quarter was negatively impacted by the COVID-19 pandemic. In the back half of Q1 with all of our store closed, cash flows exceeded cash inflows. This was primarily driven by payments made for inbound first quarter merch receipts at planned levels, as well as payments made for other pre-pandemic obligations before adjustments were made to merchandising orders and expense savings initiatives took effect.
That stated, we are optimistic about the future. We are excited about the sales slip from our stores reopening and expect to build on our expense savings initiatives that are currently forecast to generate $230 million or 24% in expense savings to plan in fiscal '20. We believe this positive momentum, along with liquidity available through our ABL, leveraging our own real estate and benefits from the CARES Act will provide the company with more than sufficient liquidity to operate our business and navigate the COVID-19 headwinds we're experiencing.
Turning to our outlook. Due to the uncertainty surrounding the current environment, there is no change to our decision to provide -- to not provide guidance at this time.
I'll now turn the call back over to the operator for the Q&A portion of the call.
Thank you. [Operator Instructions] Today's first question comes from Susan Anderson with B. Riley FBR. Please go ahead.
Hi, good morning. Thanks for taking my question. I was wondering if you could talk about productivity in the stores that have opened. How is the traffic versus conversion been? And then I was curious, are you seeing a significant uptick in the usage of BOPIS as stores do open? Thanks.
Thank you so much, Susan. Our reopened boutiques are achieving 53% of last year's productivity, and boutique sales continued to improve week-over-week as customers re-engaged with our physical location. Since week one of our stores reopening, we have had a 20-point improvement from week one to week four.
Great. That's amazing. And then maybe if you could talk a little bit about Style Connect. I'm curious maybe if there's any metrics you could give around the tool, has it grown significantly as stores have been closed? And then any data you could provide on the tool to give us an idea of how it's driving sales? Thanks.
Yes. Our customer community is one of the keys to our business. And when we furloughed all of our stores, we equipped each one of our stores with a Style Connect tool so that we could keep engagement with our customers. The great thing during this period, we were able to convert store-only customers to also be digital customers during this time period. We were able to not only communicate with customers, keep them engaged, serve them styling options for this period that was more casual, we tripled the sales volume from the same period last year in the three brands combined.
Great. That's very helpful. And then lastly, maybe if you could talk about what your expectation is for the promotional environment in the second quarter versus first quarter. Are you expecting it to get, I guess, more promotional as you look to clear excess inventory in the stores, and then also just in the environment out there in the malls, particularly of the department stores, what you're expecting? Thanks.
Sure. Promotional cadence will be based on sales, and we are not planning to be more promotional than last year. We are extremely encouraged by our customer reception of our new goods. The composition of our inventory being fresher and more season appropriate compared to last year should drive regular price sales in Q2.
Thanks. That's very helpful. Thanks so much. I hope everyone is safe and healthy and good luck in second quarter.
Thank you very much, Susan.
And our next question today comes from Roxanne Meyer with MKM Partners. Please go ahead.
Great. Good morning and thanks for taking my question. My question is on Soma. You saw really marginal sales declines relative to your other brands and just others in the industry, in general. I'm just wondering in the first quarter how performance of intimates was relative to your lounge assortment and how you're thinking about the balance between the two segments going forward in light of the larger trend out there for comfort and working from home? Thanks.
We were incredibly pleased with the business in Soma. The business is largely seasonal, given our focus on intimates. And we -- as we expand our assortment in the fall season, we anticipate to continue to have a higher demand for the sleep and the lounge categories going forward. The exceptional growth that we saw during this quarter and the new customers that visited the brand, we believe we will have continued momentum as we get to the back half of the year.
Okay, great. And then if I could just ask a question about organizational structure. I know that there have been a host of changes, and currently I don't believe there are any individual brand leaders. So, how are you thinking about who is responsible for executing on individual brand vision and leadership, and if you could just comment overall on some of these changes that you've made?
Actually there are still three brand leaders. The brand leaders are responsible for the merchandise and design and the brand DNA aesthetic. So that is still actually key to our success as we move forward. And those three brand leaders will work with the balance of the organization on the efficiencies that we have so that we can be more nimbler and we can move quicker. Since we've made those changes, the team has definitely felt the speed to decision.
Okay, great. Thanks and best of luck for ongoing recovery in 2Q.
And our next question today comes from Janet Kloppenburg with JJK Research Associates. Please go ahead.
Hi, everybody. Good morning.
Good morning, Janet.
David, please forgive me, but I got on a little bit late. I see where your inventories are right now, and I was just wondering how we should think about them going forward. And I heard what Molly said about the gross margin trends. So maybe, Molly, you could talk a little bit about your clearance inventory levels year-over-year. It sounds like you feel like you have an opportunity for product margin improvement. So, where does the clearance level situation sit within that guidance? Thank you so much.
Sure. First, with respect to the inventories. Overall, the inventory -- the inventories are -- at right now are 12% over last year. But the key element, that inventory is fresher as a result of, as Molly indicated, we addressed the dated inventory that was out of season and disposed of that. That was the $43 million charge I referenced in my comments earlier.
And so, we feel very confident about it going forward and we have adjusted receipts over the balance of the year. I mean, overall, our planned receipts are 32% less than what we’ve had last year, and we believe that our inventory level at the end of Q2 will be about 25% less than what it is today.
And how are you planning those for the back half when you think about the inventory?
At the start of the pandemic, we took immediate action to aggressively cut receipts and liquidate our inventory, both in the first quarter and the back half of the year and this was done with the goal of being clean of aged inventory and offering freshness to the customer. We believe our favorable inventory position enabled us to bring in newness to the customer at the start of the second quarter. And we are confident in our assortment, and our customers are responding really well to the product that we are offering. Going into the second half of the year, we are well positioned due to the decisions and the immediate actions that we took in the quarter.
Visiting the competition, we can see the level of liquidation that's in stores, and we cleared our old inventory out of our stores and we’ve opened with freshness that we don't see in the competition. So we’re very comfortable with our inventory levels, and we’re happy with the inventory investments that we've made, particularly in our new product launches like the Soma Vanishing 360 franchise.
So you think therefore your product margins can be up year-over-year beginning in the second quarter.
But then -- so then, we should see a gross margin rate increase offset by ongoing occupancy and expense pressure, is that right?
Okay. That's really great progress. So, that's very exciting. And on Soma, can you talk a little bit about the adjustments you've made to your assortments there to capitalize on the lounge trends and also the work-from-home trends that are going on right now.
The team has done an outstanding job on chasing the categories of lounge. We've actually moved up deliveries to be able to respond to customer demand and then able to really react to the wireless, the T shirt bras and more comfort and the all-day Sunday PJ trend that's going on.
Okay. Terrific. And just lastly on White House, I always think of White House as partially wear-to-work brand with great jackets and suitings and special occasion as well. I think you've made a shift there to more casual, but perhaps you could talk about how you think the brand will remain distinctive in a more competitive category.
Yes. We have an outstanding team in both apparel brands. And in both apparel brands, we saw last year that we really needed to make this pivot to more casual wear. That served us well in Q1 and it is serving us well now. You will see in the White House brand in particular, a lot of new fabrication that are comfortable in more knit-in fabrication. So to make it easier for customers, whether they’re sitting all day or whether they're walking around and that pivot has been served us well for Q2. And that is the direction that we're taking the brand as we move forward. If you really can't define what workware is anymore and so that change really happen before the pandemic. So we hit the curve right on this one.
Great. Great. Congratulations on that, and I look forward to watching your recovery. Thank you.
And our next question today comes from Marni Shapiro, The Retail Tracker. Please go ahead.
Hey guys, really outstanding for really crazy period of time, and those leopard masks on White House are just so perfect for you guys. Could you just talk a little bit …
I have one on now, Marni.
That makes me feel safe all the way over here. So can you talk a little bit about, you said a lot of new customers are coming into the brand digitally, and I'm curious if you could just dive into that a little bit. Are they new customers coming into the Company across the brands, or are they store-only customers that are coming on to digital? And then I have one follow-up question, just on your curbside and stuff.
Yes. We’re seeing new customers to the brand that have not shop with the brands before. So we really attribute that to the outstanding work that our social team have done engaging with customers during this time period in an authentic manner.
That's fantastic. And then you noted about curbside and buy online. Are you guys also doing ship from store? And if you could, just break down, if you are just the cost impact of ship from store versus, say, buy online pickup in store curbside.
We have …
Even just [indiscernible].
Yes. We definitely have been fulfilling from stores. Our fulfillment logic is to obviously pull from the distribution center first. And it has been a herculean feat in terms of managing that as stores open and adjusting at each week. So kudos to the technology team on how they manage this period. So we've -- we really managed to keep the cost down as much as we can, during this time period to pull from the DC first and actually as new inventories were coming in during receipts at this time period, we reallocated goods to be more digital at that time to produce lower cost on shipping, not have it be fulfilled in stores.
Fantastic. Thanks so much.
Yes, curbside, Marni, it's really been an opportunity for customers to have that contactless situation in terms of if they wanted it, and it's really been different by brand, because in -- as a Chico's brand, she couldn't wait to see her favorite customer that was in, people that were in store. So in some cases she just enjoyed saying, hi.
Fantastic. Best of luck in the second quarter.
And this concludes our question-and-answer session. I would like to turn the conference back over to Bonnie for any closing remarks.
Thank you, Rocco. Thank you very much everyone. In conclusion, we are extremely fortunate to have three distinct brands, each with unique market position which has served us well during this pandemic period. As of today, we have opened 63% of our stores and 80% of our fleet will be opened by Friday. And as our loyal customers return to our stores, sales in our digital business also continue to accelerate. I'm confident that we’re emerging stronger from the pandemic. As we said earlier, in a few weeks, Molly will assume the role of CEO and President. And during our high growth turnaround phase and particularly in this current environment, Molly has shown superb leadership. And I'm confident we’ve the right path forward for a sustainable future with her helm of the company.
I'd also like to just take a moment to once again thank all of our associates across the country for their resilience and their resourcefulness every single day to help the company move forward at the speed that we’re right now. So thanks everyone and thank you for your confidence in our brands.
Thank you. This conference has now concluded. We thank you all for attending today’s presentation. You may now disconnect your lines.
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