Aritzia Inc.
Q4 2020 Earnings Call Transcript

Published: 12 May 2021

[Operator:]

Thank you for standing by. This is the conference operator. Welcome to Aritzia's Fourth Quarter and Full Year 2020 Conference Call. As a reminder, all participants are in listen-only mode and the conference is being recorded. I would now like to turn the conference over to Helen Kelly, Vice President of Investor Relations. Please go ahead.

[Helen Kelly:]

Thank you. And thank you all for joining Aritzia's fourth quarter and full year fiscal 2021 earnings conference call. On the call today, I am joined by Brian Hill, our Founder, Chief Executive Officer and Chairman; Jennifer Wong, President and Chief Operating Officer; and Todd Ingledew, our Chief Financial Officer. Following management discussion, we will host a question-and-answer period open to analysts and investors.

[Brian Hill:]

Thank you, Helen. Good afternoon, everybody. And thank you for joining us. Together with Jennifer and Todd, I'm pleased to report our Q4 and year-end results, while providing insight into the exciting year ahead. Q4 ended what was unquestionably the most challenging year in our history. I'm incredibly proud of how our team navigated the uncertainty with discipline, resilience and agility, and in light of this, the exceptional results we delivered. It was a year we will remember for not only what we accomplished, but how we accomplished it. And as we begin fiscal 2022, we're extremely well-positioned to capitalize on the many growth opportunities ahead, with a focus on both our surging ecommerce and US businesses. While Todd will provide the financial details of both Q4 and fiscal 2021 shortly, I'll start by sharing the highlights of our sustained strong performance. In the fourth quarter, our net revenue decreased by just 2.9% from the prior year, with ironically the US actually being up 9.2%. This is in spite of ongoing occupancy restrictions, reduced operating hours, and the closure of 57%, or 39, of our boutiques in Canada for the majority of the quarter. Furthermore, our ecommerce business continued to surge, growing by impressive 81% from the fourth quarter last year. Turning to the full year, our net revenue decreased by just 12.6% from the prior year, despite the sustained impact of the pandemic. Importantly, we capitalized on the consumer shift to drive ecommerce growth 88%, ending up comprising approximately 50% of our net revenues for the year, more than double the penetration of 23% in fiscal 2020. Our results enabled us to generate free cash flow and improve our strong liquidity position, which allowed us to continue to invest during this turbulent year.

[Jennifer Wong:]

Thanks, Brian, and good afternoon, everyone. Echoing Brian's comments, I'm so proud of what our team has achieved together this past year. Fiscal 2021 results demonstrate our resiliency as we successfully adapted to the changing environment, while still driving Aritzia forward. Today, I touched on four areas of focus within operations. I'll reflect on the quarter, what we've accomplished in the past year, as well as our path forward. First, I'll provide some color on the continued agility demonstrated by our distribution and logistics team in the face of ongoing supply chain disruptions. Second, an update on the digital investments we're making to drive continued ecommerce growth. Third, an update on our ongoing investments in talent. And finally, our progress on ESG. Throughout the year, our DC and logistics teams have responded quickly to the global supply chain disruptions brought on by the pandemic, while maintaining efficient daily operations.

[Todd Ingledew:]

Thanks, Jennifer, and good afternoon, everyone. The fourth quarter was not without its challenges. However, given the environment, we're extremely pleased with the performance of our business. We generated net revenue of $268 million, a decrease of just 3% from last year. This was despite a $57 million shortfall in revenue from the closure of 39 boutiques in Canada for the majority of the quarter, as well as another $18 million related to severe pressure from occupancy restrictions and reduced operating hours in our open boutiques.

[Brian Hill:]

Thank you. As Todd touched on his outlook for Q1 in fiscal 2022, we're excited by our strong start to the year and are energized by our bright future. While the uncertainty of the pandemic remains, with the ongoing closure of 50%, or 34, boutiques in Canada, and economic conditions vary widely, we're well-positioned. Our ecommerce business is continuing to surge. Our US business is flourishing, and we're optimistic that with the vaccine rollout accelerating, we'll see similar business recovery in Canada in due course. As such, we're expediting our investments in the four strategic leavers that drove our pre growth. Our growth pre-pandemic shared our success mid-pandemic, and will fuel our growth post-pandemic. First, digital innovation of ecommerce, retail, and omni-channel capabilities. Capitalizing on our accelerated multi-channel client relationship, as discussed, we have a full team in place to launch later this year, our omni-capabilities project. We will continue to invest in new digital capabilities, both online and in our boutiques, including ongoing personalization of developments, enhancements to our international site, and the continued rollout of our digital selling tools. Second, geographical retail expansion with a focus on the United States. We will continue to grow our boutique network across North America, capitalizing on the availability of premier real estate locations. In fiscal 2022, we plan to open six to eight new boutiques in the United States, including The Grove in Los Angeles, Woodbury Common in New York, and Topanga in California, which are slated to open late Q1 or early Q2. We're also planning six expansions this year, with four Canada and two in the United States. Third, development through all product divisions. We will continue to expand our beautiful and multi-dimensional product lines this year. We'll launch new categories, including our swim line later this fall and our intimates line for summer 2022. Our clients will also enjoy extended depth, including color, length, and more inclusive sizing range for our top selling items, and breadth, including warm and all-weather product, as well as expanded denim assortment and the introduction of our Super Bowl collection, all those contributing to our on track five-year plan to double our style count. And forth brand awareness in both the United States and internationally. We have a comprehensive strategy and development to further capitalize on our exciting growth opportunities in the United States, complementing our boutique openings and expansion plans. In doing so, we expect to significantly increase our brand awareness, while also growing our bench strength in digital marketing in this flourishing market. To support these four growth drivers, we'll continue to invest in infrastructure. This includes adding to our high performance team, hiring strategic targeted roles at all levels, consistently enhancing the efficiency of our processes, enriching our technology suite, and thoughtfully expanding our distribution center network to support our growth. While the past year has been the most challenging in our history, through the hard work of our team, and resilience and adaptability of our operations, we're in an extremely exciting position. With our surging ecommerce and the United States businesses were investing strategically, capitalizing on the balance opportunities ahead and elevating our clients much loved everyday luxury experience. As we close out fiscal 2021, I would like to thank our investors and analysts on this call, and thank our almost 5000 extraordinary team members. I'm humbled and privileged to continue to lead our dedicated team and Aritzia out of the pandemic and into our bright future ahead. Thank you.

[Helen Kelly:]

With that, can we open the line-up for questions?

[Operator:]

The first question comes from Mark Altschwager with Baird. Please go ahead.

[Mark Altschwager:]

Good afternoon. Thanks for taking my question. With respect to the revenue guidance, can you talk about how you're thinking about the trajectory of the recovery through the year relative to the pre-COVID levels? The guide seems to imply deceleration on the growth versus pre-COVID levels after Q1, now, I know US is benefiting from stimulus in Q1, but you're still dealing with some significant restrictions in Canadian stores. I'm trying to understand how you're thinking about some of the puts and takes there, as we move through the year.

[Todd Ingledew:]

Hi Mark. The 110% that we're growing off of FY2021, if you calculate the growth off of FYI2020, the growth is actually effectively consistent from Q1 through for the rest of the year. It's just because in Q1, obviously, our revenue was much more depressed than the rest of the year last year, because all the stores were closed for the majority of the quarter. And so therefore, we're going for 110%, over up by 2021, compared to 30% to 35% for the full year. But if you compare against FY2020, the ranges are relatively consistent.

[Mark Altschwager:]

Fair enough. That's helpful. And then, maybe a bigger picture for Brian, now that we've kind of concluded the original five-year plan, obviously, the final year being a little bit different than we all were anticipating. But just any broader perspective on how you're thinking about the revenue and earnings growth algorithm over the next several years?

[Brian Hill:]

Yes, it's really too bad because we're on track with everything and we actually should be using this call to announce our next three or four or five-year plan, whatever we decided to do. As far as algorithms go, I actually haven't thought a lot about algorithms, statistics and calculus. So can you just explain to me what do you mean by the algorithm? You're talking about leverage, or what are you talking about here?

[Mark Altschwager:]

Yes, I just mean how we should be thinking about the top line growth rates over the next few years, and where you think the margin structure will go?

[Brian Hill:]

I don't see our margins changing too much other than we're going to be doing more and more business in the US, and our margins are better in the US. So I think our gross margins will improve. Is that fair, Todd? And that's just purely from a mix perspective, I don't see our margins expanding on a product perspective, we have a pretty consistent margin. We know what our customers expect from a value proposition. And I think due to sustainability and things like that, we don't want to chase, we've never been the one to chase the lowest producer and everything else for our product. So we're comfortable with our supply chain, we're comfortable with the margins, we're pretty comfortable with everything that we have, and the sustainability aspect of our product, although we are continually trying to improve it, but we're pretty comfortable with all our suppliers. So we're not out chasing different countries and different exchange rates and things. So I don't see our margin changing much, per se. From our cost of goods, I do see it from the mix, as I mentioned, but I do see our business accelerating in the US, if Q1 is any -- and I know businesses, in general, pretty good right now in Q1, the retail business in the US, but Canada's harder to say. It's a little bit more challenging in Canada, because we haven't really come out of it. I don't know if it's going to look like the same kind of recovery in Canada as it does in the United States and we're just three months behind. I don't know if it's slower. I don't know the economic situation in Canada. And we certainly don't have the growth runway we have in Canada that we have in the US. So I see us growing in Canada more from just a product mix perspective and offering more product to people. I think most people -- there's not really a sense of discovery for us in Canada. But our US is where we're really banking and really seeing some great uptake in our business in the US, and biggest we've ever seen, quite frankly. And we're really think we're getting famous. And we're slowly opening these stores in new markets. And we have three stores in Texas now, we have a store in Colorado and Pennsylvania now, we have a whole bunch coming in various other states. And so, we just think that we're going to see expanded revenue growth. We have so much room in the United States in the United States; that's where we're going to get our growth from. So we're pretty excited about that.

[Mark Altschwager:]

It's really helpful. Thanks for all the detail and best of luck.

[Operator:]

The next question comes from Irene Nattel with RBC Capital Markets. Please go ahead.

[Irene Nattel:]

Thanks and good afternoon. Just following on those last comments, if we think about the very strong performance in Q1, can you talk about the mix, what are people buying as things reopen? Presumably, you saw the cadence and the geographic mix tied to what reopened when, and also wondering, given the profile in the US is being raised, whether you're seeing your geographic mix of sales shift a little bit within the US.

[Brian Hill:]

I'll talk some and Todd can take some. But yes, we're certainly seeing our geographic expand, that's why we're opening in Florida in different places, we have a really great store in Florida. And it's just happens to be ecommerce. And so, we're seeing some great expansion from an ecommerce perspective in the United States and states that we had essentially zero business in three, four years ago. So we're seeing that happen. And we're seeing, when we open the stores, that accelerates even more, so we're pretty excited about that. What's the other part of the question?

[Todd Ingledew:]

The product mix, are we seeing the same type of products?

[Brian Hill:]

No, it's interesting, you're saying that, because there's two -- let's face it, the US and Canada and two different states right now, there's a lot of shutdown. And so, we're still selling lots of at-home clothing. We have seen our US business -- the products has started to change in the US, they're going out a little bit more, obviously, it's a summer collection. So it's a little bit different. But we are seeing a little -- our dresses pick up and are going out clothing pick up a lot more in the US. It was interesting, we pivoted very quickly and the team did a remarkable job. But we had some incredible, professional and more dressy and going out clothing, it was really driving our business for a few years leading up to the pandemic. So it'll be interesting to see how much of that comes back and if there's been some permanent changes. Obviously, people aren't going to be going to the office as much. But we'd like to think people are going to be going out as much and requiring this clothing. And what's so great about our model is we do casual, we do dressy, we do summer, we do winter, we do everything so well. So the team, I'm really proud of them and their shifts, and we started to see the shift in the US. We have yet to see in Canada, though.

[Irene Nattel:]

Yes, we're all still woefully suppressed and locked down here. And then, just one final question, if I may. And it's really going to the brand and the brand reach and the brand visibility. As you're generating this momentum, with the influencer strategy, with the key strategies, are you finding it easier now, are you finding more people coming to you? How is that evolving?

[Brian Hill:]

We're certainly seeing more people who work in the industry coming to us, maybe not the influencers or the people that hire and book the influencers and things like that. We've hired some pretty meaningful positions to pursue this. It's interesting to see what's going to happen with influencers, obviously, there's been a major shift from Instagram to TikTok. And there's a whole different set of players there. I think some of the typical go-to imagery and things that was on Instagram that was perhaps driving sales pre-pandemic changed during the pandemic as people's lives change. It'll be interesting to see if they go back to that imagery and lifestyle and if that resonates. We saw a shift from pre-pandemic to during the pandemic, we saw a shift in the imagery and the influence that was going on out there. And I think it actually changed what influencers people were actually following, engaging with. And we think we're going to see another one here as well, coupled with the move to TikTok and some of the other platforms. So, we're seeing different -- we don't get influencers approaching us directly, although we do have a lot of celebrities wearing our clothing on a regular basis. But what we are seeing is people coming to us and saying, hey, we can help you and we'd like to come work for you and join the team. So we're certainly capitalizing on that.

[Operator:]

The next question comes from Mark Petrie with CIBC. Please go ahead.

[Mark Petrie:]

Good afternoon. Could you just talk more about the drivers of the ecommerce growth? I'm sure it differs significantly in Canada versus the US. But the evolution you've seen in terms of new customers discovering the brand or the substitutions from stores. And then, also just what you're seeing in terms of on the actual site conversion rates over the course of the year and given all of your investments?

[Brian Hill:]

Yes, we're still a work in progress on some of this data, because it's changed, like, the US has certainly changed with all the stores opening and our retail stores in the US doing so well, there's been a shift there. And so, we're seeing who's moved and who hasn't moved from there. In the US, initially when the pandemic started, we saw a shift from people that were shopping and retail shopping online. But we also have had a huge influx and increase in new previously shopped at Aritzia at all. We're ironically still seeing a lot of new customers come into our retail stores on a very high rate right now. And then, in Canada, it was mostly the shift, most young ladies shop with us in Canada already. So it was mostly a shift from retail to our online channel. It'll be interesting to see on that shift and what goes back and what's not. We're trying to track -- it takes a while to figure out if you've actually had lapse to customer or you've lost a customer. And so, we're working on a lot of that. It takes -- a lot of people have measurements of a year, some people have mentioned two years. So it'll be interesting to see what happens there. Our strategy is to make sure though, that the customers that were shopping retail, that then came and started shopping online, remain as omni-customers, they go back to retail, but they continue to shop online because they've proven to be the best customers that we have. And in the US, it's more of an acquisition play, Canada is more of a retention play and making sure those customers are activated and retained, whereas in the US, it's a big activation play. And that's what our strategy is in the US still.

[Mark Petrie:]

Yes, understood. Okay. And then, I just want to ask about the denim category. It's been a couple of years since the launch, we've seen you adapt and expand the offering, it's sort of topical. It seems like you're well-positioned in terms of the trends in that category. But can you tell us more about what you're seeing in the denim business? And maybe just in terms of context, how would you think that category would rank in the opportunities you see in your assortment for taking more share of wallet?

[Brian Hill:]

We've expanded our denim line too, we started off with Denim Forum. And we ran with that for a few years, just more or less building our infrastructure and capabilities around that. We've now recently in the process, and we haven't launched them all, but we've coming up with denim categories in our Baritone, Wilfred and TNA and Sunday Best and some of those brands, so the target was to get our -- we have three different sources of denim, we have external third-party brands, we have our Denim Forum brand, and we have our existing clothing brand. And the target was to have a balance between the three of those. We're obviously doing a great job in the Denim Forum and the third-party brands, but now our growth is focused on our denim that are in our exclusive brands and building that out. And so, we're launching Babitone , I think for fall but it might be for spring, I'm not sure. Wilfred is launching and everything else, those are more fashion-focused, whereas Denim Forum is more basics-focused. Surprisingly, we're actually seeing some -- really resonating with non-denim within our denim collection, as well. So that's actually been a pleasant surprise. So we're on track. I think we're -- from an infrastructure perspective, we're moving into a second phase where we're doubling down on our infrastructure as far as production capabilities, sourcing capabilities, QA tech capabilities. Denim is a very hands-on business, so certainly has been a little harder to operate with COVID and inability to travel, certainly something that's far more hands-on in the factories, in the mills and connecting with people. And so, it's actually being -- our denim people traveled more than our clothing people. And so, this is been a little bit difficult for them. But we're super excited with where denim is. And we're right on track to where we had planned several years ago when we launched it, and we're right on track with how we're processing, rolling out now into our other brands, and we're staying true to what the plan was, and it seems to be working.

[Mark Petrie:]

Can you give any context with regards to the magnitude of the opportunity versus some of the other sales-driving initiatives you have in terms of skew expansion and new categories?

[Brian Hill:]

Yes, I think -- well, I hired a Head of Denim. She came in and I said, what percent do you think denim will make up of our sales? And she said, well, I hope it's 50%. I said, if you get to 10%, I'm going to be ecstatic. So, I think that it really depends. The problem with denim is, denim is difficult. I'd said that all along, people heard me say it 1000 times here, Levi's created the 501 and they spent 100 years coming, trying to find an encore to the 501. They built an incredible business, but nothing is still -- I don't see beneath the covers there. But, I think they still sold more 501s than any other denim they've had. So it's not an easy category, whereas some of the other low hanging fruit in our product categories, like adding length and adding color and things is so simple for us. So, I actually like to think that perhaps maybe some of these other category expansions are actually going to be more important. And as we continue to open up in Southern California, and Florida, Hawaii, and places like that, our warm weather offering is going to be meaningful for us because it's fine for spring and summer. But come fall and winter. It's a challenge selling coats and parkas, and things like that in these areas, and it's going to make up more and more and more of our business. As you can see, looking at the population map in the US, a lot of people live in the southern United States, and our product is resonating, but it's resonating in spring and summer. So, we have to make sure it's also resonating fall and winter. So there's a whole bunch of categories. And I think really when I had a board meeting and I list them all out, the input that I got back was slow down a little, you can't do all these things at once. So we have all sorts of opportunities on our product, and we're just going to make sure we plan for them and strategically put them in order and phase them out properly. But certainly some of them are easier than others. And I would say denim, I wouldn't say is the hardest, but it's in the top third hard hardest to actually go out and expand and execute on for sure, compared to some of the others.

[Mark Petrie:]

That's very helpful. Thanks. So I'll pass the line and all the best.

[Operator:]

The next question comes from Stephen MacLeod with BMO Capital Markets. Please go ahead.

[Stephen MacLeod:]

Thank you. Good afternoon. I just wanted to think about -- if you look back over the last year, obviously the resilience of the business has really shone through and the consumer response and engagement has been very strong in terms of ecommerce, as well as in store. But I'm just curious, if you think back, is there anything that you would identify or point to as potentially a consumer shopping behavior, or consumer consumption behavior, that might be more permanent as you begin to exit the pandemic?

[Brian Hill:]

From purely a product perspective, I think, we had a whole bunch of core product, go-to product in Canada, and in the US, tour clients weren't coming to us for that. They weren't coming to us for our basic pants and fleece and things like that. And that's now changed. It's changed meaningfully. So, one of the things that -- you can show all the fashion you want, but you make money in this business, selling the meat and potatoes of the bit of the product, and we weren't selling, we weren't the place to go to. And in previous shocks in the United States and previous accelerations and different trends, when things got a little tighter in the US, it actually hurt our business more in the US than it didn't Canada. And in this particular case, we're just finding a resilience of our brand. It's just obvious and looking what we're selling and looking for a go-to place now, a go-to shop in the United States, whether that be online or in our stores. And I don't think we were before, so we've been seeing and noticing that. I think, it's really biggest thing we've seen as a category expansion into the US. The second thing we've noticed is -- back to our brand is our new stores are opening up higher. When we were originally going public and we pencilled out new stores in Canada in the US, we had a far longer, longer ramp in the United States than we're seeing now. Our new stores in places like Glendale and in Philadelphia and in places, we've noticed a huge recognition and hitting the ground running way more than we were three, four or five years ago, and certainly more than we were 10 years ago. And is that because of the pandemic? I don't know, specifically, if it is. I know it's certainly hurt our competition. I think our inventory being clean and launching with new product rather than selling older products throughout the last year has been really helpful for us. I think our decision to have a lot of inventory and new inventory and fresh inventory this spring, I think has helped us quite a bit. So, I don't know if there's been too many specific small things other than some big moving things that I think is changing. And I just think our place, particularly in the US, in the mind-set of the consumer in the US, we're a player now. They know who we are, they're showing up, they're on our website as I mentioned, we've seen our business and online in Florida and places like that expand. And quite frankly, that's why we're opening up stores in Nashville and Charlotte and places like that, we're doing good business in these places now, whereas five years ago, we weren't. And I was a lot more concerned about how we're going to make money in some of these secondary markets. And we're actually doing really well in secondary markets. We've seen it, as soon as you know, the size of the United States has opened up opportunities for us. So it's really been the brand recognition, has been the clients coming to us everywhere now for the staples they need, it's repeat customers coming to us and all that's very exciting.

[Stephen MacLeod:]

Yes, that's great. And then, thinking about that strong momentum in the US, you mentioned some DC investments in Vancouver and Toronto that's part of this year's CapEx. Are you going to be needing to make further DC investments in the US to meet this strong demand?

[Jennifer Wong:]

Hi Steven, it's Jennifer. If you recall, I did announce a couple of quarters ago that we did expand our Ohio DC, we expanded the space there that we felt would last us at least three to five years from that point forward. A lot of our is out of Canada, hence the expansion in our two DCs in Canada. And so, right now, what we're doing, as I mentioned in my remarks, is that we're conducting a centroid analysis, essentially a network analysis that will allow us to really plan out where we need our DC nodes. We are contemplating some form of expansion in the US, but right now in the near and midterm, it's primarily Canada.

[Stephen MacLeod:]

Okay, that's helpful. Thanks, Jennifer. And then maybe one last one, if I could. On the last call, Brian, I think you mentioned that you found that your omni-channel customers typically spent -- I think it was three times more than someone who was in-store, ecommerce only. Are you still seeing that multiplier effect?

[Brian Hill:]

Yes, that hasn't changed in several years. And I haven't really looked at it since the last call, I suspect it hasn't changed because it was very similar for years. And then, I think my team would come tell me, hey, Brian, we got a 911 here, they're not spending as much or kind of running into my office if they're spending more than ; but you know, we haven't seen that change. The key thing here for us is making sure that these customers that weren't able to shop retail, a lot of them that moved online, stay in both channels, and that is going to be super important for us. And so, we're really working on strategies around that.

[Operator:]

The next question comes from Dylan Carden with William Blair. Please go ahead.

[Dylan Carden:]

Thank you very much. You set up my question perfectly there. I was just curious, the implied first quarter guidance growth, United States seems pretty profound. And I'm just wondering if you can give any color around the give and take between the two channels, online and retail, embedded in that number, what you're seeing as the world opens back up as far as retaining both new customers and some of the traffic in the online channel?

[Todd Ingledew:]

Hi, Dylan. Yes, what I would say is that we are seeing continued acceleration of our ecommerce business and strength in our boutique, traffic and business, as well. So it really is across both channels that we're seeing sustained momentum.

[Dylan Carden:]

Okay. And then, you've touched on it a couple times on this call, maybe the new geographies that you're thinking about from a retail perspective. Are these added to or incremental to your initial store targets in the country? Or is this just following migration patterns in the United States more than anything?

[Brian Hill:]

It's really following a migration pattern, except for the fact that our targets are higher now. When we were sitting down looking at -- with the team looking at our goals and planning of how much business these would do. So, whoever's been taking me over has been winning these bets now. So, that's why we're getting more and more excited seeing how good our business in Houston is. It's 50% more than we thought it would be, even presently. Our business in Austin is 50% better, business and Glendale is meaningfully better. We're opening these stores and we're doing meaningfully better than we thought we'd be doing. So we're super excited about that and we just think it bodes well for all the stores in the southern United States. And we'll see what happens as we start opening the southeast. Hopefully, we experience the same thing. But, there's opportunities in Vegas, there's opportunities in Phoenix, there's opportunities all over the place in the United States and the southern United States is a lot of people, it's not just land into Orlando or Lauderdale, it's all sorts of great place, great customers we have in the United States, and this great shopping centers, and obviously, our e-com ships everywhere. So this is what's so exciting, just the fact that we seem to have unlocked the southern United States a little bit more than we had in the past. So that's what's super exciting.

[Dylan Carden:]

Are you rethinking the box at all as far as size or location? Geography is a little different, but just locations within these geographies.

[Brian Hill:]

It's funny you asked that because there was some hesitancy a few years ago, taking on larger locations and that hasn't seen it's gone now. It doesn't matter whether we're in Canada, United States or northern United States, Southeast, Southwest, we're after the same size box. We in Austin, we have a really big store, we have an old Apple store that we took, and it's doing extremely well. It's a big store. And so, we're looking -- our store in Topanga, I think is over 10,000 feet, which -- our average that we're out looking for is eight. So we're super excited about the opportunities, we're getting great real estate. And there's not that many people opening new stores, there really isn't that many people opening sizable new stores. So the landlords, we're making great partnership with landlords right now, they want us and we want real estate. And so, it's been great. But no, we're not changing our footprint, it doesn't matter where it is. And we need to show our product. And one of the things that we found is, particularly with our category expansion, we can't have our stores holding 5% or 8% of our product, they need to hold meaningfully more of our products. So we need to make sure they're expanding and they're representing the brand properly and representing all customers. We have a wide range of customers, both from an age perspective and an income perspective and everything else, so it's important that we're able to showcase a good representation of all our product.

[Operator:]

The next question comes from Patricia Baker with Scotiabank. Please go ahead.

[Patricia Baker:]

Good afternoon, everyone. Thank you very much for letting the call go after 5

[Jennifer Wong:]

You're right, it is probably too early to have real empirical data. But I will say anecdotally, it's a feature that internally, we're very, very, very excited about, an externally we've heard lots of great qualitative feedback, that this is the direction that people want to see us go in. And we do believe that, first and foremost, that makes shopping -- our goal is always to make the shopping online easier and more seamless and easier to navigate where to find specific products and specific attributes of our products. And with sustainability being so important, as well as the content of our sustainability factors, whether it's recycled or organic, increasing in our product, and hopefully increasing further even beyond this current season, we want to be able to showcase that. So that is a huge feature and we're feeling very positive about it. And we're getting just really a great qualitative feedback on it. We'll share more as we learn more.

[Patricia Baker:]

Okay, super. And I'm not surprised you're getting great feedback on that. And then just one last question, you talked about investing in talent, and you referenced that you've now hired a US President of Retail. Can you give us any details on the background of this hire? And I can understand why now, because you're growing so fast, but just a little bit more detail on that specific hire.

[Jennifer Wong:]

Absolutely. I've personally met her and interviewed her along with our Head of Retail, she's a seasoned professional and comes from luxury. She's obviously a born and raised US citizen and we feel that she knows the market and all of the regions in the US extremely well. And I would say she spikes particularly highly in terms of the client experience. And we felt we really connected in terms of the exceptional experience to offer to all of our clients, quite frankly. And while she's based on the West Coast, she travels into the stores and connects directly with our people and our clients face to face, even though she's President and an Executive, she's very grassroots and loved connecting with people, both our own people, as well as our clients externally facing. And I think she's actually right now, as I said, she's in the West Coast, but she's actually -- I think she's in New York, I think I talked to her. She was in New York yesterday when I talked to her. So she has no problem traveling. And what I love about her is that she sets a real example in terms of how we want to exemplify our values internally, as well as our brand externally. And I think I've said it a few times now, I think she's very client-centric. And we've just been super impressed with her. She's only been with us a few months that we've been super impressed with her.

[Patricia Baker:]

Okay, tremendous. Thank you.

[Operator:]

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

[Helen Kelly:]

Thank you. And thanks for everyone for joining us this very busy earnings afternoon. Sorry our call ran a few minutes late. But we will be available after the call to answer any questions you may have. And in this environment, please continue to take care. We look forward to speaking with you again very soon. Thanks. Bye.

[Operator:]

This concludes today's conference call. You may disconnect your lines. Thank you for participating and have a pleasant day.