Levi Strauss & Co. (LEVI) 5 Oct 232023 Q3 Earnings call transcript

Good day, ladies and gentlemen, and welcome to the Levi Strauss & Company Third Quarter Earnings Conference Call for the period ended August 27, 2023. [Operator Instructions] This conference call is being recorded and may not be reproduced in whole or in part without written permission from the company. This conference call is being broadcast over the Internet, and a replay of the webcast will be accessible for one quarter on the company's website, levistrauss.com.I would now like to turn the call over to Aida Orphan, Vice President of Investor Relations at Levi Strauss & Company.

Thank you for joining us on the call today to discuss the results for our third fiscal quarter of 2023.

Joining me on today's call are Chip Bergh, our President and CEO; Michelle Gass, our President; and Harmit Singh, our Chief Financial and Growth Officer.

QX section in of complete on earnings posted IR the our have financial our results release We website, investors.levistrauss.com. the on to also link webcast conference today's The call be found our site. of can on materially remind you statements. and will forward-looking involve We'd like contemplated this could by that which differ to call, results those be we making statements from uncertainties.Actual forward-looking risks our Quarterly information section with on our Please in Factors our cause Form SEC, that filings XX-Q factors filed Report differ. Risk the for of review included XX-K we and our the particular, our results the to in could Form today that of that note statements. and the on based on us today, available to any as Also we obligation this these call are no of forward-looking statements assume information update to

certain their call, Reconciliations financial measures comparable not for we measures are a discuss to to results. are our in GAAP press this measures non-GAAP most will intended non-GAAP release. measures.These be substitute today's GAAP included our non-GAAP of During

limit is Please of shortly. this constant unless Finally, noted. opportunity over to this to be for hour Today's to be replay yourself call the questions and like Michelle a turn have one Harmit website will the will call otherwise being website, IR addressed.And at call numbers, and on referencing available that Chip. call a to their Chip, give note so is question to currency our please on one the scheduled time others now webcast I'd

I'll will wrap channel, some comments will everyone, months. impressions prior was through before business direct-to-consumer to strong it business after will X% Q&A. a who and joining we were on softness us. delighted I challenging the our the guidance, Reported continued Michelle on as the by Harmit environment. despite I'm Aida. with before year quarter us Good constant on business and and roughly currency up offset joining Michelle, a thoughts our revenues high-level take afternoon, her we in financials flat today. the call of you a to Overall, Thank had basis. X and share wholesale thank and then to on with now passing solid the excellent growth continue for with you you, overall the have in basis growth down in double-digit particularly the U.S.Gross even margins on progress line outlook on to inventory comparable revenue as the inventory, make exceeded start

want are disciplined to margin deliver up strength us points main with I overall. execution, about to is continues the One, has consistent quarter our and been. three ever the points. proof several by enabled it upside to to expectations. our arguably is from EPS the This Levi's strongest combined go make There backed Our with and brand the strength business

action the First, driven continue pricing primarily to QX, AURs at of despite the in we by took U.S. end wholesale grow the mix.

continues to the X of men's, We core market and age full-price the XX-year-old income X Levi's with and in gain share our grow up to in U.S. momentum Tier products.In see brand women's strength and strong sales continue to business our consumer with XX- mainline group. Tier addition, share higher our

in our equity metrics, denim our continue consideration in brand see unaided and key Finally, growing to brand we strength awareness markets. across

strength partnerships including and initiatives we upon and the an collaborations of As brand, more. have the with to Crocs, DENIM Kenzo, the to K-Pop holiday build exciting of in we forward pipeline XXXX, Band look season TEARS, the NewJeans product

about this the quarter, we we Harmit Yoga, prior Dockers in shows Beyond bullish Yoga also segment impairment and explain which long-term. year. up versus a took Beyond generating detail, charge $X.X Yoga Our strength. brand are nearly Despite Other more now had revenue.Beyond billion strong will in Together, Brands annual remain very XX% very on

working, We priority six this first being are fiscal driving results. Chicago. with They of our brands Two, our will are outside first of strategies they're driving California and right. brand-led. our in just stores, finish strategic covered our including and retail store year our I

on the is Comp Our further.The grew will comped and which both prior in versus priority in underscoring discuss to every strength also DTC, mainline, second strategically channel, Michelle Harmit was up outlet across year region every the region focus every Levi's XX% business and brand. and and in positively in of QX DTC e-commerce. and traffic

have XX% our and premium in U.S., XX% sells growth with double XX% growth versus DTC of U.S. most results the this grew mainline, accelerated quarter which comped on year ago. digit business quarter. prior e-commerce the our Our the In top year product

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to strategic diversify the and to women's company, third continue key priority growth international Our driving in is tops.

outpace business excluding X%, continued Our Russia. International total plus to growing company the

double-digit the three strong and was our Asian growth India, largest China Asia Japan. again in markets, standout with

continue shift [ evolve to to low and Our by driven to Wovens, Non-Graphic a grew, Polos. by we X% rise a assortment. see women's women's loose in dresses business and the was strength up, Levi's revenue bottoms.We and also expand Tees, in ongoing in ] Outerwear driven fits where Tops strength increase continue

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recent our the to today innovation. return our build working delivering and could excited we working to years further the our be this decade-long have will to & We looking ensuring built the strong chain next help pricing phase ahead with key over the wholesale with XX over to to it optimization doing the improving growth.Now, be at here and through been our I'll financials LS legacy, growth. am to the the work relationships year the the more execution, for supply are of plan Co., of in and success years past have opportunities we company more drive The and and growth.Near-term quarter. guide continued include amazing newness Harmit channel stabilize challenging, long-term turn partners And our fuel team I this us with momentum upon partners. to sustainable, has while to I forward not walk profitable

key the my business by today sharing Welcome, before into will begin everyone. our I diving three and about results numbers. comments our observations

our by First, in we our year areas revenues we quarter, the sustained strategic of in progress are strong focus. and prior In growth International achieving driving third businesses. direct-to-consumer

wholesale.Second, adjusted a just seeing and gross we August continue, discipline in but I comparable overall expense our seeing inventory company. to positive enable improvement the July three, which with at on momentum and as to deliver we not share results. In and line outlook. our to driving exited our are also quarter these strong in we business our with of for EBIT margin, us improve relative is our both in can brought the three businesses driven U.S. X% exceeded in an We operating QX, are growth a down growth that by U.S. basis, quarter expectations

as have mentioned, review to evolution smaller structure. and over powerhouse our business, DTC-driven strategic low-growth cost wholesale supporting U.S. a of operating acceleration retail a by to broad-based nimble entire more e-commerce our business.Given a we DTC our a and global the while a and overall support initiated model business and Finally, a in wholesale we will year, coming accelerate transition creating Michelle our organization into the consumer-centric to

increased will and profitability review of result this business. capital savings, productivity material expect our cost working in DTC including We and

more will this and we we margin these to are demonstrated a share long-term goal, efforts next confident As the quarter. in plan adjusted of EBIT details have initiative impact the we about that past, solidify

quarter Now let's third results. turn to our

business our the margin partially expansion contraction share, gross XXX in favorable $XXX light have in of lower across 'XX, geographic DTC as prior consecutive with and our we driven basis came points, mix excluding Versus yet posted high franchisee sales, channel sales And XX.X% complementary brands best better QX, EPS all franchise price of margin 'XX. franchisees driven basis comp extension in to offset comprised QX positive positive net capture store were continued XXXX, Overall, X%. channels ] total XX% pricing net sales than shift lower company-operated growth, together, growth. and have X% partners, our volumes.Comp expenses our by EBIT the quarters driving by expectations, and by last points and drive with and in was with X.X%, DTC single-digit up in XXX XX the channel up Along was quarter gross growth FX.Adjusted mix, prior geographies in Adjusted Russia. enabling line airfreight DTC. We volume growth and stores above while with line us the year, adjusted since and XX% million, to broad-based The in our of product driven was to contracted traffic SG&A six [ strategic was revenues QX strong with $X.XX, higher XX% Adjusted present entirely and to business higher increase lapping been actions our favorable our year. year, own Our count in driven direct by up the reflecting almost opened full view returns. market margin both our diluted from costs by year-to-date, of guidance. was a DTC expectations.

the Beyond well accounting year-to-date. Our the conjunction conditions acquisition adjusted our with Beyond due of to annual The related EPS the investing impairment macroeconomic QX increase impact charge brand to diluted well, Yoga and million and impairment current XX% rates.Despite excludes the team response the Yoga perform in expansion a testing. strategically and continued to XX% anticipated to $XX previously in an was in in slowing EPS, as in discount up as non-cash to

our being driving growth. remain profitable and committed long-term the to to growing disciplined its are brand We approach with

growth Europe in Americas, currency. growth and continued segment revenue Strength sequential countries and top up declined X% the year. by of with by saw DTC down strong X%, markets driven the net XX%, the all driven excluding with broad-based led X% continued August X%, as constant X% broad-based Latin In strength on growth, XX% of America Here up saw was with by Russia, are was Brazil.While of in Mexico growth DTC's revenues with on the excluding key a year highlights growth by all ago. prior top and Despite softness summer DTC this across quarter cautious versus year. July Russia, up a prior buy. improvement we customers was in the both record channel open we wholesale temperatures in move through as business. broadly by growth offset performance particularly Mainland with our to their remain momentum

denim, While focus we the assortment on growth all wholesale and our DTC XX%, our XX% year working with almost to and very growth, are they continued by all accelerating strength to dresses particularly closely partners markets. lighter are continuing and while ensure lapping again including also DTC saw across strong driven right newness, high business, we more weight channels, up last have deliver tops.Asia

Asia's top were others. all as markets, Turkey, India, China and and up Thailand Japan double were several digits strong

basis XXX also leverage. to points XX.X% to strong margin operating due expanded Asia's

strong our inventory sheet progress dollars achieved Now X%. looking our increased on to goal balance inventory flow; cash and we Reported QX. in

by from with standards. more point QX and in with However, year on representing increase Americas two-thirds by inventory last industry inventories last change, is quarter. with being growth the enabled is now the terms cash the quarter to in terms shipment simplifies will XX increased our down in a a for prior Asia. third the negative the ways driven in are optimize further expected brought into this our of us quarter, Adjusting already to ERP basis. X%, to turns modification ownership was be make comparable destination.This $XX in million million inventories year-end and and point with below rather expect we to Europe deceleration line year-to-year by flow a of for supplier inventory improve of and working capital.Adjusted for closer the by now of than year's taking with progress upgrade than goods are global of from overall of was and year-over-year below recent change $XX year. to down just working existing continue with consistent in and working Inventory the is This sent inventory suppliers QX U.S. Though the end levels free we level, last revenue line goods

to improve to through flow our repaid In free As expect the We're line quarter, now cash dividends, returned shareholders we fully with and continue with QX borrowing. year. in inventory cash our this the have last in end were million outstanding year, position flow. confident also the capital via approximately to year ABL positive we we in which $XX

wholesale four momentum share per last DTC we turning as quarter our of $X.XX flat quarter continued in U.S. in declared with dividend we've 'XX, the quarter.Now a third three For while earlier, with for line quarter, in to our September. was revenue exited outlook; in and reported mentioned global business improving trends

we are fourth our to the macro taking outlook approach for in However, the a the cautious quarter. environment, uncertainty ongoing given

in the within the is guiding full range we up expected Asia, U.S. decline continue despite flat now year, in guided are single-digit Latin segment, expect to expect digits, in growth the the For of Russia.And Europe's continue low up to Americas revenues still to we X%. teens. in a America. excluding strength By growth and low-single we DTC previously low for continued

For mid-single-digit the quarter, fourth to implies this revenue increase. low- a

XX.X%. We points and gross for approximately fourth contract quarter. to prior year's the translates XXXX the basis versus This XX points to margin adjusted full year XXX approximately expect from to continue basis

of EBIT X% to SG&A full dollars, We for continue an the approximately in full a mid-single-digit for increase and margin year adjusted expect yielding year the up XX% to fourth quarter.

the our previous end range Given of low EPS outlook we of narrowing $X.XX. these our $X.XX factors, to are to

high-single digits tax closing a Chip prior year end the up on now it call in the the before turn by for opening back rate Lastly, Q&A. below QX basis.I we quarter expect over to inventory and will for comparable remarks levels

while controllables coming. macro we environment newness and navigating the the innovation the of level our in of an control brand to with and heightened continue a the We around uncertainty strength pipeline We're have confident world.

you performance strong as the and structure us priorities.Latif, is U.S. for Our deliver the actions to enabling growth confidence the a laying team discipline profitable global DTC-driven are years rigor Q&A. executing and of on connection to stabilize near-term to focused you results by can our accelerate brand now with and extremely and continued our in advancing to the our our with My to time heard organizational sustainable, our for while to leadership momentum, strength that, consumers and given with is high, floor support in on our remains our Harmit, ambition. wholesale us foundation DTC and ahead.And transition open deep Michelle our underscores we're the in working, and business from the

[Operator first question of from of Bob the Guggenheim. Drbul Instructions] Our line comes

Michelle, questions if focus it would guess of And Michelle. do your I necessary to of be, months you I in steps first guess at couple business? think far? welcome. I Two-part the part surprised so stabilize you Levi just one just X given for question. like background, your wholesale what What are the a really to could, second

for you Thank Bob. questions. Thanks the

say in of an be surprised, terms be couldn't opportunities ahead amazing most So team. iconic It's is more It here. world, for an growth the brands being company. to the well, I'd of that just I first, one first awesome in excited incredible and

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partners brand, got of they but adapt travels global know, on where world grow passionate, have highly a of footprint. brand, investing.I We around to of partners from investing lot while the dollars growing opportunity be the India I how grow the invest committed markets you franchisee we've the power we're then mentioned And And they got our through stores to mean, to as and the really and relevant. our have too. are, many local call our during our had are dramatically a really them. are number and the they too the pandemic and hear the

one see potential. So biggest the growth me, so takeaways of I say for been of a yeah that. -- And just ton has I'd

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We have most a and Marketing Distribution. Head and then Logistics a Officer new recently, new Chief of

the we're set team drive agenda. up our So really with to

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have We customers. these long with relationships

them important headwinds, issues of point are the any our is and to we familiar have anticipated. excited I'm the really not all issues. are of to many And we're around There with. the to We but us. us year them clearly arms during and are here. important One things. three they met I'd with my macro time that It's

value to in year, we've course our are issues, the seen addressed And third, DCs, of us customers which we us.As behind have about concerns Second that our is some these of improvement. fits, over congestion our have we've some which largely the were faced some talking we then addressed. sequential

mentioned on that the earlier think I call. Chip

month to early even in there. each improvement this quarter days across improved. see then quarter, so And continuing the of the we And are

pipeline. But more think we're as our going to and beyond there think bringing I whether have to fundamentals about head-to-toe you're been we innovation. more stores into up. it, [Technical equation Difficulty], about I and that, and of of denim better the that partners about XXXX, value do brand executing very presenting And call I I so this talk we deep dressing, wholesale a as expression can having though, it's and own this of our the holiday, believe shipments, product just set we in addressing, job with We've it's a really look and our where our bringing lifestyle so as some we fall that's see fashion, importantly, innovation.And customers. early

started to a can reinstate that some and believe in stabilize I'll already the we have lot we've of we've ultimately platform But in a important tease talk got innovation to growth channel. out this point We future. about there. new us at that in front that

of next Please the question which comes from Jay UBS. standby line Sole our of for

margin outline mean quantifying an elaborate you a maybe helpful. you June was what the guidance Harmit, Can EBIT overview that targets structure. the terms the impact you actual into that long-term as Investor of of or if in context maybe That at through given XX% Great. cost adjusted see it of you bit going the of 'XX. mentioned you a the more little of Day and part on would super bit in little be put more

believe Sure, and Jay. accelerate Michelle talked about to how we're growth. we making pivot this that our will DTC, faster

faster, While we calendar. shorter including a be agile, it's company to this efficient go-to-market to recognize early, opportunities lot has of be more that

example. me give an let So you

companies, and we vertical go-to-market Difficulty] you've have Difficulty] dresses arrived, [Technical Michelle skirts [Technical right? XX a has to drive it, this a more over of acting as XX and going a to hard year Before move take our -- more tail also but didn't of That retailer of fast. Like a versus tail, is have lot a assortment doesn't got look lot at like productivity. months.We're we wholesaler a who the

look So taking that, critical. a at I is think, hard

processes. are and more looking we be lot to going We're we So looking at all go-to-market, a are at consumer-centric.

working our clear We because DTC better operations, in we higher drives In profitability. SG&A improvements as more operations terms we capital think productivity think chain does It our and drive this supply satisfied. not drive we're COGS improves including a turns and of areas, structure. it

are will below of you But year inventory to in your a get we EBIT end give impact. your that. when is behind [Technical year, want the I -- really of there's you we I shoes Difficulty] levels we think last at quarter question levels, more quantify -- through I about that I us below While next release expectations for To we know us the our opportunity.And XX% quickly. fairly margins, if was four inventory completely what this to the lot the end understand tell

company at cost structure This is just to and that has there during our EBIT get XX% the margins the there believe to company, a the our over focus, we're looking get part we shareholders. that to entire the time. right going and be acceptable there timeframe get are of We solidifies way long-term

to So efficient lot us the company way helps and committed certainly XX%. agile. we're then more there, amplifies get make a and really our This this

our Please stand next for by question.

J.P. Our comes of the from next Morgan. of question Matthew line Boss

Great.

Could of ago? just the your health today? channels? sales you for the health that maybe speak and speak to And current elaborate on global quarter gross outlook improvement in brand and and to you And embedded trends could category. inventory takes margin puts fourth the across relative months in channels North are then distribution and three Harmit, that to America So on seeing across Europe Chip, just demand you're sequential

Sure.

the of seeing prepared stark not all, try too business repetitive we're between was what or be in But dramatic results wholesale. direct-to-consumer First I'll the with to remarks. a Matt, versus contrast our in

each region. strong and we pretty up double every up region, each outlet direct-to-consumer in region in channel comped in -- So in chain positively mainline up e-commerce each in plus digits each in

to the report rarely weather long for I the knows, have all everybody hot when you it's So it.We're pretty of -- in as Michelle doubt that really our said. been as the denim I going wholesale action results. really no summer pretty about assortment bottoms, soft. is wholesale to things be bottoms. assortment our wholesale broad very responding kind agile, business women's, of is really, think we've into we late known this, there QX. We consider a digging hot pretty and quarter is talk business down our very, becoming the agile the tops, But talking also to the was summer, But can pretty because take in there's one and more by strong men's, work somewhat time. about results during a me pricing DTC And been I'm did even impacted much as on

and it announced they happened own executed and it August. about this it that it. effect of went talked of kind early way and announced their we customer of We We in timing it So on first the own August.Every executes to throughout customers our call. on their kind month into

pricing on quarter. we six late will those we did I optimistic where seeing. see in But took the in impact we we're the with was what items actions say what that are here U.S. So

that right confidence gives on us did pricing you those reflected that say, the we I'll pick and We we are in we're items, seeing seen XXXs where I very surgical have not XXXs the all think and also an specifically We're a ] items. down trends those on past optimistic and -- we improvement being remember, customers quarter.So items in that. take this did very one were really of pricing we about strategic. number [ the up

the and up product been a a rates, more Our quarters we've they we've Michelle fourth customer pipeline back the they help to QX. fill of so that, of holiday and the and that actions that's remarks said, than the in they're inventory to going going They in were multiple better are that prepared that were had part we've this quarter in in a out pretty the taken, where better for on is is XX%. both in part strong because out down to get wholesale help now quarter, new the for trends, got situation to build that's the normalized and be getting stocks, cleaned coming impact have earlier pipeline floor.As there previous having going Q&A, quarter's into expectation to of pricing were our in full because

is soft. data where we on have the was really concrete get basis. It best U.S. That's data that The a we digits. was good in mid-single So optimistic. cautiously down quarterly we're The category

with that but So of having share we share critical And category share the grew we on to we a the on share. we grew combination XX- Again, consumer negative XX-year said Apparel was that down have mid-single with impact the that, weather women's, digits. did grew being men's, hot old. our pressured, grew

help. direct-to-consumer to absolutely as issue is we're I sequential the right think it where improvements killing making I there, in And own channel. we're and said, we're and our in So wholesale going it's brand the now. control is fundamentally And the it strong of channels,

And questions. Matt, One margins two question, think to second was asked the was for you and I your inventory QX. gross

ago. better to The end the of thought we of year trade presence is where wholesale we would than we at also quarter and Difficulty] of given a quarter actually of relative great look [Technical the inventory that which key on better wholesale down our terms -- number inventory Look large at than So the customers, is last U.S. is here. be. in months already,

a Europe spot lot piece because a our of core. is because soft.So assortment So that core a large a inventory Inventory was getting in think is I of largely sell overall, we situation in better. Europe and little good is

in in we good gross which think are from margin I to business. our expectations quarter a the business, in getting are by about that question driven beat margins, three, perspective. continued largely direct-to-consumer spot gross your To we the strength

quarter a it's margin price that channel year we've in the The structural four, margin, relative than the last of ending four, quarter DTC, gross higher puts tailwinds. basis year to the I lower as the but ago. down, in XXXX. mix, what in points initiated gross prepared think drove -- so XXX which takes, should to freight sales still think question and margins know to about year we is and largely Thinking [indiscernible] lower full the key expect remarks, you relative here ahead you FX ask slightly quarter a my than is to were If I and that actions expectation, and friend headwinds largely which a favorable to the growth air said stay.I relative be gross favorable four, were be and pricing

last lot very But inventory because should largely back our as -- four the takes costs talked better better are about drive since commodities inventory the ago.I puts seeing trade both 'XX, Michelle and lower interest. more you is that benefit in lower mean, to was gross a a margins in we is better relative into our a airfreight season is come this And in promotions year channels, is product on tailwinds essentially quarter better, feel a our four year spot. expectation a pipeline that so spot, us and holiday head what in our across a quarter start -- having and promotional. little have innovation

help gross are year-over-year quarter the think those four. that lift we margins really I in think So factors

of Cowen. question comes TD Oliver Our Chen of from line the next

Hi Chip, Harmit, Michelle.

prioritize with non-denim was your will ties like Our around What's be. on likely them you quarters. that? work the progress need don't with chasing to you and be follow-up to rates where it's sounded question you you a fill Are any more there, Because as was you very few A and of want expect a powerful. become thinking and for there? into are capabilities, rates. agility brand happy about that lifestyle which It capabilities and happening in changes fill may past been well the more capabilities as the execution

hear. Hey It's Oliver. to here. Great Michelle

part it fill the capabilities, question first Harmit on to So over the hand rates. and then take I'll I'll on of

the category our opportunities both have. And all So I'm whether super business, capability candidly. that's I'd have, expansion. international DTC fronts, building I across opportunities the said, all say and yeah, we about growing -- course, like excited we're we well, then, of of it's

and decisions. really real-time It's think [Technical I category retailer, think the end-to-end. together as more operational broadly a like operate we two piece One, in this data drive your pivot, I'd Capability-wise, and it's I Difficulty] lifestyle related fronts. question. products, making we it to that to use with in It's you cultural. it's put how to cases, about which vertical DTC around to largely both need was relates speed agility.And talk

to a bottoms wholesale lot business. products. of than with different serve can was timelines you're if go-to-market It highly business tracks be our long it's global over across years start direct-to-consumer And there that we lifestyle but denim a too built So a timeline, today. slower builds multiple move successful, should U.S.

fast you much XXX going saying bottom.Not and we're as core operate know, example, to denim your a timeline tops especially fashion. say on fashion faster than For tops become

But imperative get and that we in to turns then of make in not DTC is fact, drive categories kind business. relevance we to. inside timeline In these need for us going a getting of we're a XX-month both sure the

teams a progress. kind there's lot on lots there's great of this refining unpacking and been of already and process be, of what go-to-market will working So new

from in our to end-to-end development, are have your Secondly, it's deep capabilities areas across have it's relates my flexibility as that's say already when then it's like into side and tops fronts. well your talent over the product back to these in like design see, vendor things tremendous short or time supply it product to to supply we've chain, at vendor development. if expanded to and who expertise design, whether here, really in want in point, stores pull excited bring been able to the capability, I'd working in base you chain progress.We our I've you're etcetera. in really base. And key it's to We're Again, today how capabilities again, there's that they're time dresses, in it's new not.And an have that. be direct-to-consumer in e-comm, supplementing vendors And floor. bringing on but of or my We're so or chase things, the literally been

about So the we're I'd say the a capabilities excited thing really to building last organization. retail is run

so run to happening our their empowerment a do. our center what's business stores lot at stores, our our with and the So the to channel really giving training, the in people, e-comm stores putting

I you. already a think progress then over underway. lot good to of And Harmit,

our have It's shout the just customers by great to largely fill because world lot have around as decongest so good Oliver, been more of we our On our been and stores. to lot collectively and that a start DCs let tough rates, of really talent And try team and start had we really saying inventory. them. a we servicing me DCs a out our could we a working running people,

end -- is better by got we the that of view us end improved issue as this behind perspective. as It's of And quarter in quarter our and September.And lot that so three. exited sequentially a from is four, that

things. -- a We of are also couple

have DC, is is makes that That is the service a difference get focus DC holiday capacity. platform. and because now newness right the We a have SKUs we as price our our e-commerce East new opened a ready DTC that to on the to for ensure Coast, we to floor. service season, the service digital our and more in full And

are Difficulty] ensure [Technical miss the sale. don't we day, And a committed your that to teams every so think and point, to I

Our comes Vasilescu Laurent from BNP question Paribas. next of

to about to the great pricing the And Chip, voice U.S. X ask would Michelle, call. you on took love distribution Harmit, I have Tier in actions strategic the your in your

should would silhouettes, not if we -- more may. be maybe $XXX to bit you of love points in distribution? you around some Are another X to color And this and terms about back necessarily million of go little what across savings other the then XXXX, it, confident of revisit in a question, Just Harmit could Tier of talk price that as it type savings. you would I isolated I that just and kind really or distribution saw you're of beyond? I you elasticity. potentially gross hear, you if about it's about but just 'XX, prepared talked think we to of know see XXXX styles magnitude

And pricing. the brief pretty be try because I'll is take and keep pretty the first not too I'll repetitive, I'll still data question to on fresh. it again,

early As on own price their increase it because it in I August. timing was implemented said, announced the based on we customer sell-in. Each

have where been have inflect. rolled we kind But six trend timing out seen take items on items of on ] these the those seen out has weighed So customers the or we [ pricing customer-by-customer.

little We to And have and items I and that picked have place, just big customer disciplined the the really say that, price have further early those very, going trends.It's so trying -- this go still was still and the getting confident seen the items in -- pretty customers very adjusting price-sensitive And have past we're to reduced understand we put place trying most though. will on that concern to that really, I'm a those I that feel only. that really one into still why a days. along.I items that's had. were is I about it we distinct too mean many with not in we change a it but really temper price and line right any to week of the excited in we were some know the price items bit into not what early this

didn't isolating items, touch value and we items. vulnerable XXXs. addressed I Difficulty] think the the of our pricing on I really the said, we've done a [Technical on equation where we've XXX, And as stronger price good really, and we job those are

say pretty now. think I good My place mother we're So in never. never said, a right

now. place never a So the same down. we're at that we're not prices take good in we'll pretty I've the But of saying got confidence right time, degree high a

numbers. not this the fact piece speaking I'm get that an fact to to the that direct to And is you call, But your Yeah. question, going company our in made that once I've time should is did into operating important we're Laurent, the indicate the said the a difference material it's or of and margins. focused done is last in we've difference initiative times, between the and fact, that The twice this two entire on it on. before, and we it,

we towards have us.But think that So difference case supporting history this in I the is it's to this pivot DTC.

more the and to cost. to Difficulty] how productivity working an for more focused how on of turns capital So improvement we at focused on inventory looking in drive is are drive [Technical

Difficulty] of something company. itself And at going and sustain to so probably more will is there This a is this DTC the [Technical but company of into really difference. strategically a that evolution be directed past

time, to the floor like for this the I'd back At closing remarks. turn to over company any

everybody right. because to for are believe just bit, will the All by Thank you little our over thank QX We when we I thank in it late and questions. close Annual we Results. holiday January a I not, a happy or want time QX next wish hanging be in Well, for and everybody. report there. you your with but went everyone

much. very soon. a holiday, and you to have forward good to you talk And Looking Thank all we'll that.

Thank lines call. you. this This disconnect concludes today's at conference time. your Please