Levi Strauss & Co.
Q4 2020 Earnings Call Transcript

Published: 28 Jan 2021

[Operator:]

Good day, ladies and gentlemen, and welcome to the Levi Strauss & Co. Fourth Quarter Earnings Conference Call for the period ending November 29, 2020. This conference is being recorded and may not be reproduced in whole or in part without written permission from the company. A telephone replay will be available two hours after the completion of this call through February 3, 2021, one week after the call for the telephone replay. Please use conference ID 6963016. 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 www.levistrauss.com.

[Aida Orphan:]

Thank you for joining us on the call today to discuss the results for our fourth fiscal quarter of 2020. Joining me on today’s call are Chip Bergh, President and CEO of Levi Strauss; and Harmit Singh, CFO. We have posted complete Q4 financial results in our earnings release on our IR section of our website, investors.levistrauss.com. The link to the webcast of today’s conference call can also be found on our site. We’d like to remind everyone that we will be making forward-looking statements on this call, which involve risks and uncertainties. Actual results could differ materially from those contemplated by our forward-looking statements. Please review our filings with the SEC, in particular the Risk Factors section of the Annual Report on Form 10-K that we filed today, for the factors that could cause our results to differ. Also note that the forward-looking statements on this call are based on information available to us as of today and we assume no obligation to update any of these statements. During this call, we will discuss non-GAAP financial measures. Reconciliations to the most directly comparable GAAP financial measures are provided in today’s earnings release on our IR website. These non-GAAP measures are not intended to be a substitute for our GAAP results. Finally, this call in its entirety is being webcast on our IR website and a replay of this call will be available on the website shortly. Today’s call is scheduled for one hour, so please limit yourself to one question at a time to give others the opportunity to have their questions addressed. And now, I’d like to turn over the call to Chip.

[Chip Bergh:]

Thank you, Aida. Good afternoon, everyone, and thanks for joining us today. Looking back on 2020, I am both grateful for and proud of our teams and how well they executed in face of all the challenges created by the pandemic and other crises. From the start, we acted quickly to protect our people, our consumers and our business. We demonstrated the resilience and agility needed to meet unexpected moments, while also building for the long-term. The work we have done this year gives me great confidence we will emerge a stronger and more profitable company. When the pandemic hit, there was tremendous uncertainty about the rest of the fiscal year. We were operating against several scenarios and I’m proud to say that we beat our internal expectations and overall delivered a really strong year, given the backdrop. Our performance further validated the power of our brand, the strength of our strategies, and our ongoing ability to adapt to the changing expectations of our consumers.

[Harmit Singh:]

Thanks Chip. Good morning, everyone. I hope all of you, your families and loved ones are safe and healthy. We had a very strong quarter and holiday season, both beating our expectations despite the resurgence of the virus and resulting store closures, mainly in Europe. Quarterly revenue comparisons to prior year have continued to improve sequentially from 62% down in Q2 to 27% down in Q3 to 12% down in Q4. The structural economics of our business continue to improve as we reshaped our P&L with ongoing and outsized digital growth, continued improvement in gross margin and a reduction in base operating costs, while reallocating dollars to strategic choices that will accelerate growth. The fourth quarter was profitable and generated positive cash flow despite the double-digit revenue decline versus prior year. I’m very optimistic heading into 2021, as we continue to focus on executing our strategies with disciplined high ROI investments driving margin and cost productivity and working capital efficiencies. And I remain convinced we will emerge from this crisis as significantly more profitable and cash generative company with adjusted EBIT margins of at least 12% and with ROIC in the mid-teens. As I walk you through additional detail of our fourth quarter results, my comments will reference constant currency comparisons on a year-over-year basis in U.S. dollars, unless I indicate otherwise. We published the details of our results in today’s press release, so I will not repeat all of those here.

[Operator:]

Thank you, sir. I show our first question comes from the line of Matthew Boss from JPMorgan. Please go ahead.

[Matthew Boss:]

Great and congrats on the nice quarter, guys.

[Chip Bergh:]

Thanks, Matt.

[Matthew Boss:]

Chip, maybe near-term, any comments post-holiday on the organic trends that you’re seeing in the marketplace that was helpful color on November, and in particular, the acceleration that you saw in December? And then secondly, larger picture, I guess when we incorporate the increased casualization, distribution remapping and the permanent cost saving that you guys have spoken to, help us to think about the pre-pandemic annual targets of mid-single digit, top line, and 40 basis points to 50 basis points of gross margin as we think following the crisis?

[Chip Bergh:]

Okay. Both great questions. As we said in the prepared remarks, we were pleased with the sequential improvement in our business really from the time the pandemic started, but importantly in the fourth quarter and through the November-December holiday period. So, we feel really good about that progression. We’re not going to really talk about January since we’re in the middle of that quarter, but you all have probably seen the NPD and other data that’s out there that seems to indicate a lift in the apparel sector overall, driven in part by the stimulus checks. So, we’ll see how that plays out. But we feel really, really good about the progression in our business, the pivot to digital, the lift and the positive trends on our e-commerce and digital ecosystem as all real positives that we think we’ll be able to sustain through the rest of the pandemic and as we emerge from this crisis. With respect to the growth algorithm and Harmit may want to pile on here a little bit. We need a little bit more time to digest it. We’re sticking with our growth algorithm as it is with the exception of the fact that we believe we’re going to be able to get to that 12% operating margin North Star much, much quicker with the cost actions that we’ve taken and believe we can sustain that when we get back to pre-pandemic levels of revenue we feel pretty confident whether we’re going to be in that 12% operating margin range and – but in terms of the actual growth component of the algorithm we need to see how that really plays out. Clearly, some of the trends during the pandemic play to our advantage. And if they sustain that may translate into a different growth algorithm at the end of the day. If this shift towards casualization, we continue to see really good progress in the diversification of our business. So, we feel really, really good about where we are. But I think it’s premature to say that the growth algorithm is going to change.

[Harmit Singh:]

Yeah. I think what I’d build on, Matt, pandemic to getting back to pre-pandemic norm, there’s going to be – what we are seeing as a structural shift in the business. The business is structurally much stronger, more digital, more DTC, more international, more women. And the structural shift is helping our gross margin, especially as we really fine-tune discounting. You’ve seen that bear out in 2020. You’ve seen that bear out in our Q1 guidance on gross margin. And then, structurally, we’re tightening costs, right? And the question then is, what happens post-pandemic? I would say, the business is structurally stronger, wholesale is structurally healthier, and I think once we are at that stage or close to that stage, to Chip’s point, we’ll fine-tune our growth algorithm. But it’s probably going to be healthier and stronger if trends continue, which favor us right now.

[Matthew Boss:]

That’s great color. Best of luck.

[Chip Bergh:]

Thanks, Matt.

[Operator:]

Thank you. I show our next question comes from the line of Omar Saad from Evercore. Please go ahead.

[Omar Saad:]

Good evening. Thank you for taking my question. My first one, I wanted to ask, given the gross margin strength you’re seeing and going to see next quarter, the price increases you’re seeing, and the brand’s pricing power looks really strong, how do you think about leveraging that? Are you evolving your product lines for more premium products or premium channels? Help me reconcile that pricing power we’re seeing in the brand, also the fact that you’re also sounding really bullish around Target and Amazon and Walmart? Help me reconcile those two elements. And then I have one follow-up. Thanks.

[Chip Bergh:]

Okay. I’ll take that. I do think – I’ve always said that gross margin is perhaps one of the greatest indicators of brand health and brand strength. And our gross margin is very, very strong right now. And we’re optimistic as we go forward. One of our big focal points, as we’ve talked before, Omar, is elevating the U.S. market. The U.S. is still by far in a way our biggest market and it skews to wholesale. But we’ve been on a really intentional march to elevate in this market, more premium distribution, our customers like Nordstrom, more mainline doors, which we talked about pretty extensively over the last six months where we really do believe we’ve got significant opportunity with this intend to add about 100 doors over the next couple of mainline doors over the next couple of years. These smaller footprint stores, we’ve added a couple more in the last six months. The evidence is very, very clear that these stores are outperforming our total fleet – our total mainline fleet. So, we feel really good about that. So, we do believe we’ve got a mixed opportunity to mix more of our business up into Tier 2 into our better product, if you will. And we still have pricing opportunities. We’ve taken pricing a couple of times over the last two years and haven’t really had to roll anything back. It seems to be sticking. So, mixing more positively to more premium products is important for us, mixing our distribution as we remapped our wholesale distribution, especially here in the U.S., we’re doing that with an intentional eye on mixing it more positively. Small fun fact on Target, even though they’re a mass retailer, the assortment inside Target is very, very tight, but the AUR is going out the door at Target are higher than the U.S. wholesale average AUR. So, it’s helping us to premiumize in this marketplace. And when you look at the pad, it’s a real premium expression of the brand. So, we feel really, really good about this intentional march that we’re making to premiumize and drive higher AURs through pricing and mix. And that’ll translate to gross margins as well.

[Omar Saad:]

Got it. That’s super helpful, Chip. And then, one follow-up. As you think about the debate of wholesale versus direct-to-consumer, how are you guys thinking about owned e-commerce versus the kind of wholesale.com? Which one is growing faster? Do you have a preference or are you agnostic why? And then, what’s kind of the bottleneck keeping your own e-commerce from being a much higher percentage of the business? I think you said 8%, which was similar to last quarter. Some of the benchmarks out there are as high as 20% even 30% in terms of brands out there. Thanks.

[Chip Bergh:]

Yeah. I mean, first of all, let me say, right upfront we’re, you know while 8% is double where we were a year ago, we’re definitely not happy or satisfied with where we are because we do look at a number of other peers where their mix is significantly higher. And we’re working really diligently to see how do we accelerate it even beyond that. We have started looking at and reporting, as you know, our total digital ecosystem, which includes the pure plays and wholesale.com. We think it’s important to look at that in the total context. I am somewhat agnostic. Although having said that, I want that direct relationship with the consumer. So, if you put a gun to my head and say, pick one, I’d much rather have a consumer buying off of Levi.com than other places. But at the end of the day, I want that consumer to buy Levi’s. And so, we do look at the total ecosystem. We want the entire ecosystem to rise and we want to rise with that. So, we’re continuing to invest in building new capabilities on our own e-commerce site. We talked about the app. We’ve talked about the loyalty program. All of these things, I think, are going to contribute to us driving that revenue on our owned e-commerce higher in the years ahead.

[Omar Saad:]

Great, Chip. Thanks for the insights. Appreciate to understand where .

[Chip Bergh:]

Thanks a lot, Omar.

[Operator:]

Thank you. Our next question comes from the line of Bob Drbul from Guggenheim Securities. Please go ahead.

[Bob Drbul:]

Hey. Good evening, guys. Just two quick questions for you, and then I have one follow-up. The first one is, when you talk about China, I just wondered if you could give us just an update on the percentage of the sourcing from China these days. And I think at one point it was like 8% a few years ago, I just want to see where it is today. And I guess, is the reset there largely complete and are you looking for more robust rates of growth in 2021?

[Chip Bergh:]

So, I’ll take both of those and I’m going to try to be pretty quick just recognizing how many people are in line here. With respect to imports from China into the United States and mitigating any risk there, trade or otherwise, our imports into the U.S. from China now is less than 1%. And you’re right, it was 8%. And if you go back, it was 8% several years ago. And if you go back even further, it was more than that. So, the supply chain team has done a great job mitigating any trade-related risks or other risks with imports from China. We’re in a really good place there. With respect to our business in China, we are not completely done yet. We’re making really good progress. The results in our owned and operated stores have been strong here recently. If you look at our business a couple of years ago, 70% of our business was done through franchise partners. That’s now down to 50%. 50% is company-operated. We’ve built a couple of these big beacon stores, as we’re calling them, in Wuhan and Shanghai. We’re excited about what that will do from a branding standpoint. And over the last two years or so, we’ve closed more than 200 doors. We’ve closed franchise partners and/or shifted to other franchise partners. So we still have some work in front of us. It’s not over yet, Bob. I wish I could say that it was. We still have a little bit of work ahead of us. But we’re really optimistic based on the results in our owned and operated retail stores and some of our better-performing franchise stores. And I expect by the time we’re kind of into the second half of this year or getting close to exiting this year, the hard transformation work from a customer standpoint and channel standpoint will be behind us.

[Bob Drbul:]

Got it. Can I sneak in one more, Chip?

[Chip Bergh:]

Quickly.

[Bob Drbul:]

I know. So, I guess, when you look at the comfort clothing, casualization a little bit, there’s some talk around baggy jeans making a comeback and anti-skinny jeans. Is that something you think you guys are seeing or can benefit from over the next few months and quarters?

[Chip Bergh:]

Yeah. Actually the line that we – we launched a loose-fit line this past season. It’s in our stores now on both men’s and women’s as sort of a loose straight fit off to a very, very fast start. So it is definitely something that not only are we seeing it. I think we’re kind of leading this trend, to some extent. And I think it’s here to stay. I don’t think skinny jeans is ever going away on the women’s side of the business. But there’s definitely a trend towards more casual, looser fitting clothes in general and same is true in jeans. And we’re seeing our loose straight fits performing really well over the last couple of months.

[Bob Drbul:]

Great. Thank you very much. Good luck.

[Chip Bergh:]

You bet. Good talking to you, Bob.

[Bob Drbul:]

You too.

[Operator:]

Thank you. Our next question comes from the line of Paul Lejuez from Citigroup. Please go ahead.

[Paul Lejuez:]

Hey. Thanks, guys. Just want to talk about the EBIT margin guidance for next year, the 12% or more. Just curious I’m sure you’ve got a range of revenue outcomes. And I’m curious just thinking about the flexibility in the model, what’s the minimum level of sales that you would need to kind of hit that 12%? Just curious about your ability to kind of manage through various scenarios. And just curious if you could maybe give a little color on what you’re seeing in terms of order books from your U.S. department store customers versus the Targets, Walmarts, Amazons of the world, and just to get a sense of how they’re thinking about inventory management and forward purchases? Thanks.

[Harmit Singh:]

Paul, on the operating margin, I think, we remain consistent to what we said earlier, which is, when we get to 2019 levels, we feel good about delivering 12%-plus operating margin. And that continues to be a combination of accretion in our gross margins. You’ve seen that happen even in the pandemic here. We’ve guided a decent number. And the gross margin accretion is largely driven by two factors, one is the channel and geographic mix, which is higher gross margin and the second is driven by the higher AURs, which is a combination of price and lower discounting. SG&A, our view is returns back to 2019 levels after all the costs that we’ve taken out net of the investments we’re making. To your question about the order book from our customers, what we’d say and the inventory levels, we’d say inventory – health inventory is very similar to health inventory at the company. It’s largely core. You can carry season to season with a third – that’s seasonal. We feel good about inventory. The order book, we don’t get into the order book, but our view is that it’s largely the store closures. Thanks to the virus resurgence that’s causing the decline in sales. I mean, Europe, for example, as I mentioned in the prepared remarks closing the doors in November. We were already beginning to track higher than 2019 levels at the end of October. So, we feel the strength of the brand is really strong and our product lineup is really strong. So, we feel confident about emerging from this strong, especially as the casualization trends continue.

[Paul Lejuez:]

Got it. Thanks, Harmit. Good luck, guys.

[Harmit Singh:]

Thanks, Paul.

[Chip Bergh:]

Thanks, Paul.

[Operator:]

Thank you. Our next question comes from the line of Lorraine Hutchinson from Bank of America. Please go ahead.

[Lorraine Hutchinson:]

Thanks. Good afternoon. Chip, I just wanted to follow-up on the goal of moving to half of the business. I know over the years about tops, maybe if you could just rank the opportunities that you see between accessories, footwear, chinos, other categories, how do you get to that half goal?

[Chip Bergh:]

Well, the half goal is kind of a throw down that I put out to the organization to say how do we continue to drive diversification in a, I think, big kind of way. And when you look at all of the different categories where we compete and where we still have sizable upside opportunity, I think we can get there any number of ways. But clearly tops today remains one of the biggest opportunities for us. I jokingly say, we don’t buy market share data on tops because even though it’s now 21% of our revenues, I don’t think we’d scratch a 1% market share in tops. So, lots of upside opportunity there. Outerwear continues to be a big opportunity for us as well. And then, non-denim bottoms, which kind of comes and goes, but we talked in the prepared remarks about doing this sweat capsule, sweat suit capsule that we did earlier in the fall. And that went really, really well. And if you look at what the kids are wearing today that’s what they’re wearing. And that represents a significant opportunity for us as well. So, I’m not going to try to rank order one through five, which one’s the top priority because they’re all big opportunities for us and we have different parts of the organization really focused on it. So – but we are – part of our story over the last four years has been the diversification of the business for five years. We talked about it in the script, the progress that we’ve made in some of these categories. And we’ve set kind of ambitious targets for the next 10 years that if we achieve those, half of our business will be in denim bottoms and half will be in everything else. And that will be a really good outcome because it really does expand our portfolio and our share of total closet.

[Lorraine Hutchinson:]

Thank you.

[Operator:]

Thank you. Our next question comes from the line of Jay Sole from UBS. Please go ahead.

[Jay Sole:]

Great. Thanks so much. Chip, I want to ask you about the next-gen stores. I think, the numbers that you mentioned that if you see the business being 60% DTC over time and it sounds like about a quarter of that would be e-com, it suggests there’s a big piece that’ll be full-price stores and outlet stores. Can you talk about the percentage that you see of the business being full price versus outlet and how the next-gen stores fit into that goal?

[Chip Bergh:]

Yeah. It’s kind of interesting. It’s a good question, Jay. If you look at our business around the world today, here in the U.S., our retail footprint still skews very heavily to outlet. And the outlet model has historically been made for outlet. In Europe, our businesses skews more towards mainline stores, and Asia same way. And so, one of our biggest opportunities is to change our retail footprint here in the U.S., which is this mainline opportunity. So, these next-gen stores, by and large, they are smaller-footprint stores, the 2,500 to 3,500 square foot store. And we believe – and they deliver a really good return on investment. I mean, we now have a couple of dozen of them up and running around the world, and they are outperforming our fleet. We have a high degree of confidence in our ability to execute these stores, smartly assort them, using data science to assort these stores down to the door level. And when you think about all the white space that we have just in the U.S. alone, I mean, I keep saying we have no stores in Boston where there are a college-age students and hopefully sometime soon talking about the new doors we’re going to be opening in Boston. But we have huge wide space opportunities here in the U.S. to shift the mix more mainline and it helps to premiumize the market, which I talked about earlier. It helps to elevate the AURs in the market earlier – that I mentioned earlier. And so, that really is the path that we are on.

[Jay Sole:]

Got it. And then, maybe just one quick one. On the next-gen stores, do you see them as mall stores, as street stores, I mean, do they have the ability to sort of go in different types of locations?

[Chip Bergh:]

We’re not in many indoor malls today here in the U.S., which is the good news. We have very limited exposure to malls. And many of these stores are in kind of outdoor lifestyle malls, if you will. And they can also be street level stores. So, it’ll be a mix, but we’re really focused on A locations, we’re capitalizing on lease opportunities that are out there today where we’re getting great rates relative to pre-pandemic rates. And these kind of stores can really go anywhere, but we’re really not going to expose ourselves very significantly to indoor malls.

[Jay Sole:]

Got it. Okay. Thank you so much.

[Chip Bergh:]

You bet.

[Operator:]

Thank you. Our next question comes from the line of Laurent Vasilescu from Exane BNP Paribas. Please go ahead.

[Laurent Vasilescu:]

Good afternoon. Thank you for taking my question. Harmit, I think you mentioned Europe as of October it was kind of like it was up year-over-year just slightly would suggest to me, and tell me if I’m wrong here, but November might have been down 20%-plus to get to that a 9% for the quarter. Is that the right way to think about it? And how do we think about Europe for the first quarter? And then, on the flip side, how should we think about Asia for first quarter as you start to anniversary the COVID impact in Asia called out on last year’s fourth quarter?

[Harmit Singh:]

Yeah. I think, good question. I don’t have the specific November number, but I think your math is fairly close. I’d say, December, Europe actually started fairly well. We had stores open. And then as we closed December, it went back towards the third of the doors open. January, we have probably at this time, 40% of our doors are closed. And you would think of where we get the business because every country, they’re different in different places on the lockdown. If you think of where we get the business, about 50% of our business is Europe in terms of the doors we have across franchise and ours is closed. And as things get better, we believe, you know we’ll come out of it pretty quickly. On Asia, sequentially our business has improved. And as I mentioned as we started December both China and India reported double-digit growth. So, I’d say, Asia – and also because if you think about our quarter one, our quarter one largely had no impact for COVID other than China and other than one month in China. So, sequentially it probably gets a little better as we think about the quarters.

[Laurent Vasilescu:]

Very helpful. Thank you very much.

[Harmit Singh:]

Thanks, Laurent.

[Operator:]

Thank you. I show our next question comes from the line of Kimberly Greenberger from Morgan Stanley. Please go ahead.

[Kimberly Greenberger:]

Great. Thank you so much. Great call, and really good color, particularly through the holiday season. So thank you so much for that. I wanted to ask one question about Q1 and then one just about, kind of, longer-term margin puts and takes. In the first quarter, Harmit, I think I heard you say down high-teens. You said in constant dollars, and I just want to make sure I understand what this means. Is this as reported in dollars? Is this constant currency? And how – what would that mean for the report that we’ll see in dollars? Let me just clarify that one first.

[Harmit Singh:]

Yeah. I know it’s – it’s Kimberly, good call-out. This is in constant dollars. Reported dollars currency should benefit us, I think, in revenue if the rates are where they are today by about 2 percentage points and I think slightly more benefit on EPS. So, we should see some benefit on a reported basis in Q1 because of currency.

[Kimberly Greenberger:]

Okay. Wonderful. Thanks for that clarification. And then, it’s very intriguing. It sounds like you would expect to get back to revenue parity with 2019 in the back half of this year. And I’m wondering if – how we should think about the margins, particularly in Q4, for example, as we get later this year. Should we think about a 4Q margin, for example, that’s above 4Q 2019? And then, you’ve phrased it as sort of 12%-plus in your out-year target on adjusted operating margin. Maybe you could just dive a little bit into the plus. What are the opportunities for margin to actually go above that level? Thanks so much.

[Harmit Singh:]

Yeah. I think, in terms of Q4, so if you think about gross margins being the prime driver of the EBIT margin, and you – I would just use the same seasonality on gross margins as we have seen over the last few years, Q2 and Q3 are weaker than Q4, for example. Q4, we feel assuming the virus doesn’t – is ugly head further, we feel comfortable that we can get to 2019 levels of revenue and accompanying that will be EBIT margins of 12%. The 12%-plus is primarily going to be driven by the pace of acceleration of our gross margin. And structurally things tend to go the way they are than we could get a higher rate of growth, as well as the curtailment of base – we feel good about curtailing our base costs and that’s why we indicated that we feel good about getting back to 2019 levels of SG&A. The question really is going to be about, do we continue to invest in our growth initiatives that we have talked about that structurally enhances business for the long-term or not? And that’s why rather than giving a number at this stage, we have set a 12%-plus. If you’d asked me, when I joined the business eight years ago, I’d say, the goal was to get to 15% and then DTC happened and e-commerce happened and a whole bunch of other things happened. And so, we decided to invest and grow the business. And so that’s why one is being a little cautious at this point, but we feel good about getting to 12% and then going from there over time.

[Kimberly Greenberger:]

Great color. Thank you.

[Harmit Singh:]

Thanks, Kim.

[Operator:]

Thank you. Our last question comes from the line of Alexandra Walvis from Goldman Sachs. Please go ahead.

[Alexandra Walvis:]

Fantastic. Thanks so much for getting in the question here. I have two for you and perhaps related. The first one was on the loyalty program. So, you mentioned that you were up to 4 million loyalty members. I wonder if you could share any metrics of the superior performance associated with those customers, anything from the order value, higher frequency of engagement, and if that’s just higher, do they shot more in the DTC channel? Anything you can share on that front and the potential for that program would be great. And then, secondly, on market share, it seems market share has accelerated during the pandemic, you know any thoughts on where you will emerge from a market share perspective, post-pandemic versus where you were pre-pandemic?

[Chip Bergh:]

So, I’ll take a shot at this, Alex. And good to talk to you. Happy New Year as well. So, on the loyalty program, we’re still in very early days. We do have 4 million members. We launched it in Europe in the last quarter or so. We have 2 million members in Europe and 2 million in the U.S. We are using the loyalty program to personalize opportunities for every single member. But we do have some early metrics here and we’ve run through a couple of them. Our loyalty members’ lifetime value is 27% higher than non-members. Total revenue from loyalty transactions is up 193% over Q3 and consumer shopping in two-plus channels within the quarter was up 26% over Q3. So, we’re actually seeing these loyalty members be also more multi-channel shoppers. So, again, it’s kind of early days and we’re using data science to power all of the personalization and everything else. And we’re trying to learn quickly, reapply those learnings and go from there. But we’re really happy with the early start that we’ve got. What was your second question again?

[Alexandra Walvis:]

Just any thoughts on market share …

[Chip Bergh:]

Market share, right, right, right, right. Yeah. So, I mean, our biggest – we’re number one in men’s, number one in women’s globally, number one brand globally. We’ve made good share progress on our women’s business, primarily in Europe. Over the last year, we’ve gained market share in a couple of the critical markets in Europe. I would say, in last quarter here in the U.S., our women’s business actually fell back a little bit. We lost a share point. And that was because we decided not to get overly promotional. We lost a share point to Old Navy who was very, very promotional and we just decided to not go there for the sake of maintaining the strength of the brand. We’re confident we’ll get it back. And – but we continue to believe we’ve got opportunities across both the men’s and women’s business. Obviously when you’re the biggest guy, the probability of losing share is higher than your probability of gaining share, but we’ve demonstrated our ability to gain share here over the last couple of years. And we believe part of emerging is stronger when we declared we’re going to emerge stronger. Part of it is coming out of this with share gains. And we have a number of weak competitors and we think we can capitalize on that as we go forward.

[Alexandra Walvis:]

Fantastic. Thank you for the color today.

[Chip Bergh:]

Thanks a lot, Alex.

[Operator:]

Thank you. Ladies and gentlemen, this conclude today's Q&A session and today’s conference call. Thank you for participating. You may now all disconnect. Everyone have a good day.