Urban Outfitters [URBN] Conference call transcript for 2021 q1
2021-05-25 23:06:03
Fiscal: 2022 q1
Operator: Good day, ladies and gentlemen, and welcome to the Urban Outfitters Incorporated First Quarter Fiscal 2022 Earnings Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time. As a reminder, this conference call is being recorded.
Oona McCullough: Good afternoon, and welcome to the URBN first quarter fiscal 2022 conference call. Earlier this afternoon, the company issued a press release outlining the financial and operating results for the three-month period ending April 30, 2021. The following discussions may include forward-looking statements. In today's commentary, unless otherwise noted, all comparisons will be made to the first quarter of fiscal 2020, referred to as LLY. It's important to note at this time, the global COVID-19 pandemic has had and continues to have a significant impact on URBN's business. Given the uncertainty about the duration and extent of the virus, impact to the global retail environment, content discussed on today's call could change materially at any time. Accordingly, future results could differ materially from historical practices and results or current descriptions, estimates and suggestions. Additional information concerning factors that could cause actual results to differ materially from projected results is contained in the company's filings with the Securities and Exchange Commission. On today's call, you'll hear from Richard Hayne, Chief Executive Officer, URBN; and Frank Conforti, Co-President and COO, URBN. Following that, we will be pleased to address your questions. For more detailed commentary on our quarterly performance and the text of today's conference call, please refer to our Investor Relations website at www.urbn.com. I will now turn the call over to Dick.
Richard Hayne: Thank you, Oona, and good afternoon, everyone. Today, I'll discuss our first quarter results and then provide some thoughts on the consumer and our prospects for Q2 and beyond. I'm pleased to announce that URBN produced exceptionally strong results in the first quarter, much stronger than forecasted when the quarter began. Total retail segment comps advanced by 51% versus LY and 10% against LLY. Powerful consumer demand across most product categories plus strong execution by our teams drove positive retail segment comps at all brands. North American stores, although comp negative, showed significant improvement as the quarter progressed. While continued strength in the already booming digital channel more than offset the comp store bogie. Perhaps the biggest company-wide accomplishment in the first quarter was the strength of full price selling and the corresponding decrease in markdown sales at each brand. The historically low markdown rate, generated outstanding merchandise margins that when combined with tight expense control, led to record Q1 earnings per share.
Frank Conforti: Thank you, Dick, and good afternoon, everyone. On today's call, I will discuss our thoughts on our second quarter and full fiscal year 2022 financial performance. As Dick noted similar to the first quarter, we remain optimistic about the opportunity ahead of us this year. The virus is winning in many of our markets, which is driving strong consumer demand, and we believe we have brands capable of capturing more than our share of that demand growth. Of course, there are always problems to overcome and the impact of COVID is still driving numerous challenges and cost pressures in many areas of the business. The areas most significantly impacted are sourcing and production, logistics, fulfillment, and the overall labor market. We have several strategies in place to mitigate the impact of these pressures and we'll keep you posted on how we think they will play out over the course of the year. Now, I will speak to the second quarter in more detail and a bit of full year FY 2022. We believe the second quarter could continue to show steady sales improvement versus FY 2020. We believe our Retail segment comp sales growth could land in the mid-teens range, driving total company sales in the low double-digit range. Our Retail segment comp is likely to be partially offset by negative wholesale segment sales, due in part to the realignment of the Free People brand customer base to focus more on regular price selling.
Richard Hayne: Thanks, Frank. As always, it's an extraordinary creativity, dedication and hard work of our teams that have produced our success. In addition to our brand team, who, I've already thanked for delivering record Q1 performance. I also want to recognize our shared service teams, including Barbara and her sourcing group, and Omar and his logistics and fulfillment teams, for the amazing work they did under very difficult conditions. I will recognize and thank our 19,000 associates worldwide. And our many partners around the world. Finally, I thank our shareholders for their continued support. That concludes our prepared remarks. I now turn the call over for your questions. And As a reminder, please limit your questions to one per caller.
Operator: Thank you. Your first question comes from the line of Kimberly Greenberger from Morgan Stanley. Your line is now open.
Kimberly Greenberger: Okay, fantastic. Thank you so much. Dick, my head is spinning.
Richard Hayne: Hi Kimberly.
Kimberly Greenberger: The whole brand, wow. Really nice acceleration here through Q1, the Q2 numbers sound extremely promising, Dick, my question is, just asking you to sort of dig under the covers and diagnose this accelerating momentum. Are you seeing a little bit of a catch-up? For example, I know you were struggling to get enough, inventory in stock through the fourth quarter. Are you, kind of progressively back in stock through Q1? And that's feeding your business? Is it just the product is resonating? I'm just trying to wrap my head around, just this very meaningful turnabout in the business. And I wanted to just understand, how you have parse through all the drivers? And what do you think is really at play here? Thanks.
Richard Hayne: Well, I think -- first, thanks very much, Kimberly. I think I first have to give credit to the creative group and the brands, because the product is on target. I also think that, there's a very strong demand in the market right now. And that demand, I think, is there because just beginning to emerge from 15 months of lockdown, when you couldn't get out. She is incredibly anxious to get out. And be with friends. And be social again. The last 15 months, she is as I said, been locked down and wearing sweats and track pants and lounge and the sorts of things you do, when you're just at home. And now that she, is wanting to go out again, I think she's starting to see that she might need to refresh her closet, and she's buying things that are more appropriate for outside wear, and for meeting other people and being social. So, I think the demand is there. Demand is still there on the home side. And I also think that because over the last year, she had been able to engage in many other activities that used to compete with the retail her dollar, that she's recently flushed with cash and has very little place to spend it right now. Most of the areas are still just beginning to open. So, I think that we are benefiting from that as well. So, I think it's the emergence and it's the financial end of it. But I think more than anything, it's the product and the brands and the imagery behind it. So, I give our people a lot of credit.
Kimberly Greenberger: Terrific. Thanks Dick.
Richard Hayne: Thank you.
Operator: And your next question comes from Lorraine Hutchinson from Bank of America.
Lorraine Hutchinson: Thanks. Good afternoon. I'd imagine you're chasing inventory pretty aggressively right now. Can you talk a little bit about how you're thinking about balancing, meeting the surging demand with maintaining the strong margin progress that you've made so far?
Richard Hayne: Hi, Lorraine. Thank you. And you're absolutely correct. We certainly are chasing inventory right now. We finished the first quarter with inventory at a minus 3% comp, which drove a 10% retail segment comp, so pretty healthy delta there. That being said, total inventory was up 17%. The difference between the inventory comp being minus 3% and the plus 17% is inventory in transit. So, there is your chase. I would tell you that the big reason for the increase in inventory in transit is one is we are chasing sales, as well as we are ordering product earlier than we normally would right now with the significant challenges in the supply chain from an inbound perspective. We are ordering several weeks earlier than we normally would. And this is in order to try and get a product here as early as possible to be able to meet the strong demand that is out there. I would say, overall, we are not concerned with our inventory balances. Our agents are incredibly clean. And I think if we can waive a magic wand, we actually like to have a little more inventory in-house right now. Thank you.
Operator: And your next question comes from Adrienne Yih from Barclays.
Adrienne Yih: Good afternoon everybody. Let me add my congratulations. It's so nice and pleasing to hear Urban of old back in action. So, congrats. My one question is it's on the quality of sale. It sounds like Free People and Urban Outfitters are sort of back to historically low levels of markdown, high levels of full price sell-through. Can you give us some color commentary on Anthropologie's plus one comp over LLY? What's the quality of that? And how is she this older woman, right, who is probably more of return to work than sort of back to school. How is she coming along with regard to kind of the shaping of the demand recovery? Thank you very much.
Richard Hayne: Adrienne, I'm going to ask Tricia to talk about that since that is now her job.
Tricia Smith: Hi, Adrienne. I think one of the things we're most excited about with the Anthropologie brand, as Dick mentioned, is the appetite for newness. I think its more events take place. People are gathering again. And I think an eventually return to office is definitely creating more occasions for the customer, and we're seeing that with some significant improvement, particularly in the Anthropologie apparel business. As Dick mentioned, we pulled back really significantly on promotions, and we've really focused on driving newness -- marketing newness and she's responded positively. So, I think as we introduced more casual categories throughout the pandemic, we're seeing those continue. And I think where we're seeing that the overall improvement in Anthropologie apparel overall is now, she's beginning to shop for those occasions. So really encouraged by the fact that we can continue to leverage newer casual categories and to be able to take care of her for more special occasion needs to return to office and all the things that I think she counts on from Anthropologie.
Richard Hayne: And Adrienne, I'd just add to that, make sure that you heard the prepared commentary, all brands right now are producing double-digit comps on a retail segment basis. So that gives you an idea of where Anthropologie is.
Operator: And your next question comes from Paul Lejuez from Citi.
Kelly Crago: Hi. This is Kelly Crago on for Paul. Thanks for taking my question. I guess, I think you mentioned that both UO and Free People had record markdown rates in the quarter. Just curious if you think that Anthro will be able to achieve that in 2Q given the strong trends you were seeing? And if that's the case, just curious why gross margin would look better in 2Q versus 1Q relative to 2020?
Richard Hayne: Okay. Well, I'll take the first part of it, and let Frank take the second part. There's no question, Urban had its best Q1 markdown rate ever, but Free People, not to be outdone, have the best markdown rate of any brand in any quarter. So, congratulations to both of them. That’s spectacular quarter from a markdown perspective. Anthropologie also did much better, actually had about 300-plus basis point improvement in markdowns. And I don't think that we believe that it's ended there. I think we -- the Anthropologie brand, myself and everybody involved believes that Anthropologie can do better and will do better. So, the answer to your question is, yes, we can -- we can get Anthropologie to record low markdowns as well.
Frank Conforti: And just to your kind on the sort of the Q2 plan and how we're thinking about the business right now, all three brands as Dick has mentioned, are performing optionally well. With that being said I just -- I don't think it would be prudent to plan for records. So, we are certainly planning for a healthy and strong improvement in markdown rates across all three brands. But we're not planning to set new records in Q2. But please don't take that as the brands are not performing exceptionally well right now because they are.
Operator: And your next question is from Dana Telsey from Telsey Advisory Group.
Dana Telsey: Good afternoon and congratulations on the terrific results.
Richard Hayne: Thanks Dana.
Dana Telsey: As you've talked about in the past, here, obviously, you have comparison -- but you're comparing to 2019. Where does fashion come into this? Is there a new fashion silhouette that you would say that's an added driver that's driving these double-digit comps at all three brands? And then just secondly, on the numbers side, the renegotiating of leases and occupancy costs that you've done, how much that contributing? And do you expect that to continue through the year? Thank you.
Richard Hayne: Sure, Dana. Well, I know Dana well that you probably can remember what we said almost verbatim, two years ago. And I think if you do remember, you remember that we called out silhouette shift it was in the process of occurring. And I think what you're seeing out there right now is mainstreaming of that silhouette change. So, I always talked about the big over little sort of morphing to a little over big. And so that's sort of what we're seeing. That's part of the fashion driver. The other part is what we talked about before, which is she's emerging from her COVID lockdown, and she wants a new wardrobe essentially. I'll give you an example over the last 15 months, dresses have not performed particularly well as a class in all three brands. And now they're very hot at all three brands. And I think that's a very good indication of the change in the customer mood and the change of the customer use of the apparel that she's buying. And then the last thing, as I said earlier is she has the money to spend, and so she's spending it.
Frank Conforti: And Dana, as it relates to occupancy and leases, we did leverage store occupancy in the first quarter despite the negative store comp, and that was really due to two reasons. One, the increase of the digital penetration providing for leverage and occupancy; and two, as you referenced, that we did received credits abatements and abatements in our occupancy costs. Those were primarily related to our European stores, where they were closed for the majority of the quarter. We did a good job, and the teams did a good job, I should say, in going back and getting abatements. As we look forward sort of to the second quarter, we do believe we have opportunity to leverage store occupancy again also continue to be driven by the increased penetration of the digital channel as well as the fact that stores are now starting to improve and showing stronger business there, which we think will make up for the lack of the abatements now that we don't anticipate receiving in the second quarter as most of the restrictions have been lifted in the European market.
Operator: Your next question comes from the line of Matthew Boss from JPMorgan . Your line is now open.
Matthew Boss: Great. Thanks and congrats on the improvement.
Richard Hayne: Thanks Matt.
Matthew Boss: So, maybe relative to your pre-pandemic 2019 gross margin, which I think was 31.5%. And now with the first half of the year, up over 100 basis points, I guess, any range of outcomes as we think about full year gross margin just to consider? And maybe, Frank, how best to rank multiyear gross margin drivers moving forward as we think about a sustainable level for gross margin?
Richard Hayne: So Matt, I'm going to stay focused on this year. I think there's still a lot of things yet to unfold, as it relates to the business. And as it relates to -- as you know the all-important penetration of where digital and stores land. I think what's encouraging for us is as stores that continue to improve throughout the first quarter and into the second quarter here, digital has remained really strong. So that leaves us really optimistic for with the model and what the profitability of the model can look like going forward. Relative to the year as it relates to the gross profit margin improvement of a little over 100 basis points in the first quarter, as I commented, I certainly think we have the opportunity to do that again in the second quarter. And if business remains as strong as it is right now and continue throughout the back half of the year, I think that same opportunity exists for us and velocity for the entire year to show similar levels of improvement for the entire year for all of URBN.
Operator: Your next question comes from the line of Janet Kloppenburg from JJK Research. Your line is now open.
Janet Kloppenburg: Hi, everybody and congratulations. Great quarter and great trends. A couple of questions. I was wondering about store traffic levels month-by-month and how they look in May and a particular emphasis on the city stores and what improvement or lack thereof you're seeing? And, what kind of outlook you’ve embedded for that, for the traffic levels sequentially in the second quarter. And I wanted to welcome Tricia. Hi, Tricia. And I wanted to ask on Anthro, as you work through repositioning it with casual and still special occasion and work, where are we in that repositioning? It's certainly turned faster than I expected. Do you think it's complete? Or is there a lot more to come? Thanks so much.
Richard Hayne: Okay, Janet. I'll try to take the question number one. Throughout the quarter, traffic improved. And in May to-date, traffic is still improving. There's a couple of things that you have to be aware of when we talk about comp store. It's not just the traffic that's improved, but also we have a better conversion rate and we are seeing higher AURs. Higher AURs are coming both from us having a better AUSs and AUS is a word -- AUS and also because there are fewer markdowns to be taken. So actually, while traffic is improving, it's still negative. But in some cases, we’re seeing the additional conversion and AUR overcome that and we're seeing positive store comps. The Urban brand, currently in May, is posting a positive store comp. And the Free People brand is sort of right on the cusp. So, when we take them together, all the brands were slightly negative, but not a lot. But we're still seeing difficulties in some markets, like you pointed out. The New York market -- the New York City market actually remains challenging, and traffic remains challenging. And as you know, because you live there, the traffic is down not only because people aren't back to the office yet, but also tourism. So, the double bogey there is difficult to overcome. And then also, because we look at it on a North American point of view, our Canadian stores are having a lot of difficulty because there are big restrictions in a number of the provinces in Canada. So, putting all that together, I should say we also have a number of places where the store traffic gets almost back to pre-COVID numbers, which is in the north -- in the Southeast and in the Southwest. So, again, you put that together, we see traffic improving, we see store comps improving at a faster rate. And then there are still a few outliers, mostly the large cities, but by far, the most important to us is New York City.
Tricia Smith: Hi, Janet. How are you? I'll take the second part of the question. It's still very early days for me in my role, and I'm still getting to know the team. However, I think we've identified a really significant opportunity to leverage a fantastic design team and continue some of the groundwork that's already been laid in going into more casual categories. As Dick mentioned, the denim business is quite strong and a bit underdeveloped for Anthropologie. So we're already looking to expand that and that pretty heavily this fall and continuing to strengthen dresses. So, I think that the work has been done the last couple of quarters and a lot of the improvement that you're starting to see in the apparel business particularly in May is a bit of a rebalancing, I think, of categories and really ensuring that the Anthropologie brand can meet both special occasions as well as more casual occasions in a way that she really loves the Anthropologie brand. So, I would say, kind of the stabilization of the occasion-based business is happening, but in addition, I think we're just getting started on the full expansion of the casual categories and super excited to be able to work with a great team to be able to do that.
Operator: Your next question comes from the line of Marni Shapiro from The Retail Tracker. Your line is now open.
MarniShapiro: Hey guys, congratulations. And Dick, I'm not going to lie, every time you talk about big over little, a little over big in the shift; I have a little PTSD that comes back. I think we all do. I think everyone does. Could you just talk a little bit about -- you noted a big jump in new customers in Europe? I'm wondering, if you could talk a little bit about that if you saw new people coming into the brands in the U.S. as well as they were coming through digital. And I didn't hear on the call or maybe missed, did you talk about what penetration DTC was to sales this quarter in the United States just relative to where we've been?
Richard Hayne: Sure, Marni. Digital results in North America saw new customers in the first quarter, up in the high 60s -- 60% range from Q4. So a nice gain, but not as much as it was in Europe. And as far as penetration is concerned, digital is now penetrating around 60% versus 40% for stores, so a nice gain. And obviously, a little bit different by brand with the Free People brand being the most heavily penetrated.
Operator: Your next question comes from the line of Janine Stichter from Jefferies. Your line is now open.
Janine Stichter: Hi, thanks for taking my question. Congrats on the incredible results. I want to ask a bit about the home category. I'm curious what you're seeing there. As apparel returns, are you seeing any pullback in home? And then on the inventory that you're building, I'm curious how much of that is the home category, which I know had been particularly starved. Thank you.
Richard Hayne: Yes. Thanks, Janine. The home category continues to produce very strong comps. And as I said in prepared remarks, it's amongst the leading of the -- leaders of the categories. And we haven't really seen any slowdown in home or decor. So, in fact, we've actually seen a bit of an increase. What's holding us back most is just our ability to get the inventory and get it landed and get it shipped. So, I don't think this is anything different than what many other home retailers are experiencing. It's very difficult right now because as you know, when we bring stuff in from Asia, we don't have any opportunity to switch from ocean to air with home goods, like we do with apparel. So, with the ocean freight, being -- I guess, I shouldn't go so far to say broken, but it sure is delayed, where that is our biggest bogey. Other than that, the home business is treating us extremely well. We're extremely excited about its prospects going forward. And we don't see any slowdown in it at all.
Frank Conforti: And I just want to add that in transit, in addition to supporting the home business, is also apparel based as well. We are chasing apparel. And I think as you've seen the business accelerate, its due in-part, because home strong, as Dick mentioned, and apparel is now growing. So, it's sort of additive and accelerating the overall business. So, what we are chasing into is in multiple categories right now.
Operator: Your next question comes from the line of Ike Boruchow from Wells Fargo. Your line is now open.
Ike Boruchow: Hi thanks. Congrats everyone. Frank, just a quick question on wholesale, understanding the guide for Q2, do you expect the business, I guess, Free People specifically to continue to right-size that business, meaning to be down versus LLY in the back half of the year? And then, overall, as you kind of business up, where do you think the margin potential for your wholesale business moves, to once we exit this year?
Richard Hayne: I'm going to ask Sheila Harrington to take that question, because she's in charge of it and she knows it best.
Sheila Harrington: Okay. Thank you. So the wholesale business within the Free as Dick mentioned, was planned strategically down, against historical high volumes. But it was done in a way to align with the brand vision and to make a healthier Free People total business. We feel like with the strength of the brand being where it is with total revenue for Free People up 14% and operating income, the best we've seen in Q1, that sort of supports our direction. But that being said while, our business was down, our op-income rates were mid-teens and so reflecting, where we think, we have the ability to maintain and continue to grow from.
Frank Conforti: And I just -- I want to point out that, the underlying op profit rate for Free People wholesale is mid-teens, the actual rate where we landed for the first quarter was actually just around 20%. And part of that is due to, some inventory reversals, reserve reversals that we experienced in the first quarter. The underlying is still very healthy business in the mid-teens. I wouldn't anticipate potential opportunity for some further reversals in the second quarter. So you could see more operating profit margins for wholesale looks similar. And that's just due to the brand doing a great job with reg-price selling, great job managing inventory and reducing their aging. So we've been able to take down some of the reserves that we recorded during COVID. We're working through that overhang of inventory.
Operator: Your next question comes from the line of Mark Altschwager from Baird. Your line is now open.
Mark Altschwager: Thanks. Good evening. I appreciate for taking my questions. So with respect to Free People, how are you thinking about the sustainability in the Movement business, as demand recovers and some of the going out type categories as you talked about? Do you think there's going to be a wallet share shift broadly out of active type categories? Or are you seeing the recovery in the more fashion categories kind of incremental spend, given the strong consumer balance sheets. And then, separately, kind of bigger picture, I guess, I was hoping you could talk about, how you're thinking about just sustainability of the lower markdown rates you're seeing? It seems like the industry is being pretty rational right now, a lot of demand chasing going on. I guess, Dick, in your experience, I mean, how long can these periods of demand outpacing supply persist before you see some in the industry overcorrect from an inventory standpoint? Thank you.
Richard Hayne: I don’t know I take the second question first. Sustainability of margins and the low markdown rates. Mark, I'm not going to get into what the industry will do, because I don't -- I'm not in control of the industry. But I will can tell you what we're going to do, and we're going to try to remain as disciplined as possible, because it's our belief and I think it's founded in the reality over and over again that lean inventories are the best, that fast -- speed to market is the best way to accomplish full-price selling and low markdowns, and we intend to continue to do that. Now having said that, our sales are such right now that we are chasing inventory and we do need more inventory than we have available to sell right now. And as Frank said, it's on the water as they say or somewhere. I don't know that we know exactly where it is, but it's coming. And so we're pleased with that. I think if we get up into high singles or low doubles-digit inventory increases at the end of Q2, we won't be unhappy. So I still think that, that's a very, very conservative way of looking at our inventory. We don't want to get over inventory, and we will not do that.
Frank Conforti: Okay. And I'm going to take the next question about FP Movement. We entered FP Movement with a long-term view on the growth of activewear within this space. We felt like there was a white space for fashion and performance to be met. And so while we got a little bit of a bump last year from the pandemic, we certainly don't see the slowdown in our business. As Dick alluded to, we are still up enormously in Q1. We don't see that slowing down. We believe also that the FP Movement customer will attract a wider breadth of customers than our Free People brand has. And the strength of our selling across our retail segment, our wholesale partners and the depth of business on select products are strong indicators of this. We opened seven locations so far for FP Movement to further the brand. And we're seeing that the stores are exceeding expectations from a total sales volume, knowing that the AOB and the conversion and UPTs are all higher than the Free People brands. And where our traffic is actually improving faster, sales are even stronger. So we have a lot to look forward to, I think, continuing to grow this brand.
Operator: Your next question comes from the line of Simeon Siegel from BMO Capital Markets. Your line is now open.
SimeonSiegel: Thanks. Congrats on the progress, guys. Sorry, if I missed it. Did you guys say what AUR is this quarter? And then, Frank, can you quantify the rent savings from the renegotiations at this point that will carry forward maybe just what you expect occupancy dollars to look like this year versus last? And at this point, what percent of the rent is contingency? Thanks. Or contingent rent, sorry.
Frank Conforti: Sure. So right now, coming into the year, less than 10% of our rents are contingent or percentage-based or variable base depending on how you want to refer to it. We have about 40% of our leases come up for renewal over the next three years. On our -- out of our 54 new deals this year, over 80% of those are percentage rent. So we have a great opportunity over the next three years to convert a lot of our legacy stores to variable base. We did not give out what our AURs are. Obviously, they differ meaningfully by brand and by category. So there's a lot of mix that can change in there from quarter-to-quarter. That being said, we did see very healthy, sort of, double-digit increases in AUR this quarter, and that was driven by both the Urban Outfitters and Free People brands as well as Anthropologie. I will say most of this AUR increase was driven by lower markdowns. But as Dick mentioned earlier, we did see a higher AUS also driving a higher AUR as well. As it relates to your question, I think you had three in there, Simeon, on the rent abatements. So what we did and what we've been able to negotiate over the past 1.5 years is abatements for the periods of time that our stores were closed. So going be -- going back and clawing back rent for those periods of time. There's not ongoing reduction in rent on existing leases. Those abatements hit at or near when the stores themselves were closed whether by government authority or otherwise. So most of those abatements now subside as we continue on for the remainder of the year.
Operator: Our last question comes from the line of Jay Sole from UBS. Your line is now open.
Jay Sole: Great. Thank you so much. Dick, I wanted to follow up on a comment that you made that your customer has a more cash to spend right now. How long -- how do you feel about the longevity of that? I mean perception is that physical stimulus helped really drive sales, at least in the U.S. in March and April, and maybe there's been a handoff to the consumer coming back out, like you mentioned. But how long do you think the consumer is really going to be this enthusiastic about spending? Do you think it's a Q2 thing? Do you kind of extend into holiday, even beyond? What's your view?
Richard Hayne: Okay. Jay, I think the stimulus may have had an impact with some of the customers in maybe the Urban brand and -- but probably less in the Anthropologie brand. So we don't really think that that's the main driver of what's behind this. Remember, this person -- this woman who's out there over the last 15 months hasn't been able to spend much money, in the sense that she is not been able to travel. Most of the entertainment venues are shutdown, and she hasn't even been able to go after many restaurants. So she really hasn't had a lot places to spend that money. And so it's accumulated. And I think that's what we're seeing. I think she is, as I said, reasonably flushed with cash, and there are things that she wants in order to get back into the social mode that we think she's morphing into. So now how long is that available, I guess you'd say our competition, not for her dollar, not around. I would say that it's gradually coming back. Travel is certainly increasing, but only increasing domestically. And most of the travel is still by auto. So, while planes are full on short-hauls, they're not full on long-haul, and for most of the overseas destinations, not even still able to do it. So the expenses vacations are still to come. I’m sure they are going to return the restaurants and we have restaurants ourselves. So, we are pretty cognizant of what's going on there. We see it returning and returning reasonably nicely. But, think of all the restaurants that went out of business. So, when you look at the macro environment of restaurants, there are many fewer restaurants around. And so, she's not spending as much time or as much money on restaurants either. So, each one of those areas is coming back. It will come back. It will come back gradually. And yes, we will have that additional competition for her wallet at some point in the future. I think that's after Q2, it becomes increasingly competitive. I think that we probably see -- we're probably good for most through holiday, and then we'll see what happens next year. So, that's my view on that.
Richard Hayne: And that, I think, concludes our call today. We thank you very much for being part of it. And we look forward to being with you next quarter.
Operator: This concludes today's conference call. Thank you for participating. You may now disconnect.
