NIKE, Inc.
Q3 2020 Earnings Call Transcript

Published: 25 Mar 2020

[Operator:]

Good afternoon, everyone. Welcome to NIKE, Inc.’s Fiscal 2020 Third Quarter Conference Call. For those who want to reference today's press release, you'll find it at http

[Matt Friend:]

Thank you, operator. Hello, everyone, and thank you for joining us today to discuss NIKE, Inc.'s fiscal 2020 third quarter results.As the operator indicated, participants on today's call may discuss non-GAAP financial measures. You will find the appropriate reconciliations in our press release, which was issued about one hour ago or at our website, investors.NIKE.com.Joining us on today's call will be NIKE, Inc. President and CEO, John Donahoe; and our Chief Financial Officer, Andy Campion. We are sitting together in a conference room six-feet apart, practicing social distancing. Following Andy and John's prepared remarks, we will take your questions. We would like to allow as many of you to ask questions as possible in our allotted time. So, we would appreciate you limiting your initial questions to two. In the event you have additional questions that are not covered by others, please feel free to re-queue, and we will do our best to come back to you. Thanks for your cooperation on this.I will now turn the call over to NIKE, Inc. President and CEO, John Donahoe.

[John Donahoe:]

Thanks, Matt, and hello to everyone on the call.Over the last quarter, NIKE delivered 7% currency-neutral revenue growth, despite the material impact from COVID-19 in China. This performance reflects the strong business momentum we had in Q3 across all of our geographies and categories.But, let's take a step back. We're living in an unprecedented moment. And like never before, each day requires a close inspection of a very dynamic external environment, and a clear determination of how we will respond.So, let me tell you what we've seen over the past two months. When COVID-19 began to aggressively spread across China in late January, our top priority was to protect the health and safety of our teammates and our consumers. We immediately began closing stores. And as of 45 days ago, we had closed more than 5,000 stores in Greater China, while the remaining open doors were operating with severely reduced hours. Not surprisingly, retail volume in China plummeted. But, we acted quickly and decisively, leveraging our diverse sourcing base and digital capabilities to manage the business with flexibility, and shifting our inventory to serve consumer digital demand.At a time when people were confined to their homes, we moved swiftly to leverage our digital app ecosystem and NIKE expert trainer network to inspire and support consumers across China to stay active and connected while at home.As a result, our NIKE Training Club workouts in China saw an extraordinary rise in signup and engagement. In fact, our weekly active users for all of our NIKE activity apps were up 80% by the end of Q3 versus the beginning of the quarter. And here's what happened. The strong engagement of Chinese consumers with our activity apps translated into strong engagement with our NIKE commerce app. As a result, our digital business in China grew more than 30% and maintained strong momentum throughout this challenging period, a powerful statement of NIKE’s agile problem-solving in times of disruption.Then approximately 30 days ago, we began to gradually reopen stores in China. People got back to work and retail traffic began improving significantly. Today, nearly 80% of our stores in China have reopened with more coming back on line every day. In fact, just last week, we reopened our first store in the Wuhan area. And the results are encouraging. Our digital business in China has accelerated even further over the past month, and we are now seeing double-digit increases in retail traffic week-over-week with some stores having already returned to prior year levels.Credit for this response goes to Angela Dong, who leads our Greater China geography, and her talented team of more than 1,600. I spoke with Angela two nights ago, and she's been telling me about the positive sentiment consumers in China are feeling for NIKE. And I can't overstate how impressed I am. It's become quite clear to me that when NIKE says we are a brand of China for China, it's really true. And it's no surprise to see the business already rebounding, given the depth of our connection, and the incredible strength of our local leadership team.So, today, I can say that we're seeing the other side of the crisis in China. And due to the resilience and creativity of our team in China, we now have a playbook that we can use elsewhere. In addition to Greater China, we've applied that playbook in Japan and South Korea over the past two months, and we're seeing early momentum in those markets as well. And with COVID-19 now spreading across Europe and the U.S., we are applying the same playbook. We have prioritized the health and safety of our teammates, and we've closed our stores.Over the weekend, we drove a strong digital marketing campaign to engage consumers across Europe and across the U.S. to stay healthy and connected while they're at home. And our digital commerce remains open and in growth mode, supported by our teammates in our distribution centers.We also know that this is a moment in society where the private sector has a major role to play. Companies like NIKE need to do our part. So, our teams in innovation and manufacturing are exploring designs for personal protective equipment or PPE to support doctors, nurses and others on the frontline of this outbreak. Based on needs identified by the teams and health professionals at Oregon Health & Science University, our teammates are working right now about how to best help, including prototyping face shields of OHSU and others. It's been so energizing to see the quick strike efforts of the cross-functional team to try to help with this critical need.That said, we expect the next several weeks to be a challenging period for those living in the U.S. and Europe. And I can't precisely predict how long the containment phase of the outbreak will last. But, our experience in China, Japan and South Korea gives us confidence that we will see the other side of this crisis in the near future. And I can assure you this, as the situation continues to evolve, we will be ready and we will respond. We'll be guided by our values, and we will execute with empathy and with decisiveness.For instance, we'll continue to maintain pay continuity, even while our facilities are closed or have altered schedules. We know that our people are vital to fueling our deep connections with consumers, whether they work in our stores or in our enter distribution centers. And what's more, it's simply the right thing to do.So, while this is an uncertain and challenging time, NIKE has the foundation in place to emerge from it stronger than ever. Thanks to our competitive advantages, the power of our brand in connection with consumers, our digital capabilities, our compelling product innovation and most importantly, our extraordinary team, we will manage our business back to full recovery. We know in times like these that strong brands get even stronger. And I truly believe that no one is better equipped than NIKE to navigate the current climate.So, with that said, let's go a bit deeper. I spent the last 90 days digging into this extraordinary Company. I thought I knew NIKE after five years on the board, but believe me, when you get to dive even deeper, this place is even more impressive than I imagined. Let me walk you through what I've learned through the lens of the four strengths I just mentioned

[Andy Campion:]

Thanks, John, and hello to everyone on the call.Before I speak to our business, our priority right now is first and foremost our people. Ensuring the health, safety and wellbeing of our teammates around the world is the foundation for all of the business decisions we're making. We have a message [ph] in NIKE, we win as a team. And I can tell you that the resilience, strength, empathy and creativity of our teammates has never been on greater display. Our team has always been NIKE’s greatest advantage.On that note, I want to congratulate one of my teammates, Matt Friend, on his new role going forward. Matt and I have worked closely together since he joined NIKE 11 years ago. He's been a great thought partner to me over that time, and we're working seamlessly together through this transition. As I move into my new role at NIKE, I could not be more confident in NIKE’s financial management with Matt as our CFO.So, as we close Q3 and look ahead, we see three key themes. First, as we enter these challenging circumstances, NIKE’s brand leadership and business momentum have been stronger than ever, and unrivaled around the world. In Q3, we delivered 7% currency-neutral revenue growth overall, led by 13% growth in both EMEA and APLA. NIKE Greater China was also on pace to deliver another quarter of strong double-digit revenue growth prior to the impact of COVID-19. And in North America, our strong mid-single-digit reported rate of revenue growth would have been roughly 3 points higher if not for non-comparable items including the sale of Hurley and our shift to a licensed business model with Fanatics relative to the NFL. While those transactions had a negative impact on our year-over-year revenue growth comparisons, they also result in higher profitability for NIKE.Across all of our geographies and Converse, [ph] digital remained our fastest growing channel, growing 36% on a currency-neutral basis. In fact each of our geographies and Converse exceeded 30% digital revenue growth in the quarter. Our growth was also broad-based across categories as well as across women's and men's, all fueled by innovation platforms and power franchises such as the Air Max 270, the Air Force 1 and the Air Jordan 1.Our launch of the Air Jordan 11 BRED was the largest in our history with the product selling out in 28 minutes, powered by the SNKRS app. In fact, the Jordan brand grew double digits globally in the quarter.The LeBron 17, Giannis 7 Freak and the City Edition NBA jerseys fueled basketball strong growth. And in running, we unveiled our most advanced performance running shoe ever, the Alphafly NEXT%. We also launched the new Infinity React designed to help runners run longer. And we've seen a very strong sell-through, particularly with women.Apparel, also fueled growth in the quarter, growing faster than footwear with double-digit apparel growth in our sportswear training, basketball, women's and kids’ categories.Setting aside the non-cash non-recurring charges related to our business model, changes in South America, NIKE, Inc.’s earnings exceeded the earnings that were implied in the financial guidance we provided 90 days ago. We were able to deliver that strong bottom-line performance even including the impact of COVID-19 on Greater China.The second key theme as we look ahead relates to how we're addressing the evolving implications of COVID-19. As John said, we are executing on an operational playbook, focused on positioning NIKE for an expedited return to profitable, capital efficient growth. We see each of our markets progressing through a time series that begins with the country addressing the COVID-19 outbreak, followed by three phases from a business perspective

[Operator:]

[Operator Instructions] Our first question is from Bob Drbul with Guggenheim Securities.

[Bob Drbul:]

I just -- on the questioning for the -- I guess, it's on the inventory and the innovation pipeline. When you think about the halting of organizational, the sports and the Olympics and basketball, can you just talk us through how you're thinking about the pipeline, given the postponement of Olympics? You showed some really great product last month. I’d just love to hear how you're approaching that piece of it. And then, the second piece of it is just can you elaborate a little more on how flexible your spending is, your demand creation that you sort of had planned for the next, let's call it, six months?

[John Donahoe:]

Sure. Bob, it’s John. Why don't I take the first part of that question, maybe Andy take the second piece. So obviously, the world of organized sports, professional sports leagues, and now the Olympics have put things on hold. And they're doing, I think what's appropriate by prioritizing the health and safety of their athletes and fans, and we're very supportive of that. And we look forward to when organized sport will be back and running; and when they are, we’ll be there. But, I think it's important to separate those sporting events and our innovation pipeline, because we will continue to move forward in our innovation pipeline.And as I said earlier, we're very excited about the products in that pipeline and the products introducing, in fact, more excited than perhaps any time before. And while we announced some of these products around the Olympics, if Olympics get deferred for a year, we can still launch them on our timing. So, two specific examples. As you know, the NEXT% performance running line will allow runners of all abilities to have the same technology and measurable benefits of the Alphafly NEXT% that the world's leading marathoners have. And we can launch that when the time is right, unrelated to the Olympics.Similarly, some of the sustainability products we announced at the forum, the VaporMax 2020, which utilizes 75% recycled manufacturing waste or the Space Hippie line, which is a innovative way to have low carbon footprint footwear, we can launch when the time is right, when we get to the recovering normalization periods. And so, consumer demand for those things is strong and will continue to be strong. And so, we simply are going to move ahead with our product pipeline at the right moments in the right ways.I'll just make one small final example before turning it over to Andy. In China, we got creative and we took a couple of launches that were scheduled in February and made them digital-only launches. So, the Air Jordan Retro High OG and the Air Jordan 5 Retro, we made digital-only launches in a world where stores are closed and -- but digital demand was strong. So, we're going to proceed full-speed ahead with that product pipeline.Andy, do you want to talk about the second part of the question?

[Andy Campion:]

Yes, just to summarize some of what both John and I said in remarks, and John just reiterated. We came into these circumstances in an incredibly strong position. Some of the highest full-price sell-through we've seen, inventories really healthy. As we go forward, we recognize that there will be some promotion in the marketplace. But as John said, we've also got an amazing pipeline of innovative and compelling fresh products. And what we'll be doing is working on the timing of the launch of those products and the flow of those products over time, so that while we're working through energy -- and working through inventory, we're also bringing distinctive energy to the market and to consumers.You asked about our licensed business. Just for context, our licensed business is a very-low single-digit percentage of our overall business. We'll have some impact on that business. I’d say, just keep in mind that a lot of these elite sport activities or events are being postponed versus necessarily canceled, although some have been canceled. But one of the things we recognize around here is our product -- some of our products has a little bit longer life cycle. And, come fall, we think we could be kicking off one of the greatest years in sports history.Now you also asked about SG&A. So, from an SG&A perspective, the short answer is, we've got quite a bit of flexibility within our SG&A. And that's one of the reasons you saw us deliver profitability, even in Q3, when we were all a bit taken off-guard by the significant impact of COVID-19. We were still able to deliver profitability that exceeded the guidance we set 90 days ago.As I also mentioned, based on some quick and agile work across our cross-functional teams, we see SG&A in Q4 declining versus prior year. There's quite a bit of flexibility in demand creation. And actually it ties back to your question about sport. As John mentioned in his remarks, we've done some really creative things from a digital connectivity perspective with huge impact. So, quick, low-cost, extraordinary impact and we think within demand creation we can save quite a bit of our powder for the return to a sport that we see within fiscal year ‘21.Within SG&A, our liquidity and our access to capital allows us within SG&A to stay very principled. So, continued pay continuity as John talked about and at the same time continuing to invest in those things that even now more than ever we see as differentiator long term, albeit we'll do it in a more focused way. So, beyond that, there are quite a bit of opportunities with the operating overhead and CapEx. And when I said our team has just been amazing in terms of their resilience and creativity, it actually includes in terms of tightly managing our costs.

[Bob Drbul:]

And I just have one quick follow-up. Andy, you mentioned the Infinity React helps runners run longer. I can run a pretty solid 11-minute a mile for 2 miles in my Epic React Flyknits. If I switch over to the Infinity Reacts, do you think I can get 3 10-minute miles out of those?

[Andy Campion:]

I think, we should sign up for the New York marathon. I'll come out there and run with you in November. How's that?

[Bob Drbul:]

Sounds like a plan. Good luck, guys. Thanks very much.

[Operator:]

Your next question is from Omar Saad with Evercore ISI. Your line is open.

[Omar Saad:]

Welcome John. Congrats to all three of you on your new roles. Sorry. It's not on a more normal circumstances. John, given NIKE’s leadership position in the global consumer landscape, I'd really appreciate, it’s a little bit more detail on this kind of successful China, coronavirus playbook that you mentioned you're now rolling out to the rest of the world. You hinted that some of the successful digital strategies to connect to consumers when they're stuck at home. Feel free to add any more color there. Maybe could you also distinguish between the recovery you're seeing and the behavior you're seeing in stores versus that strong digital offset you mentioned. Do you expect this share that you seem to be capturing digitally to be sticky long-term? And then, maybe most importantly, could you also talk about whether you'd expect a similar sort of demand curve in other markets as coronavirus rolls through? Thanks.

[John Donahoe:]

Sure, Omar. So, one of the real advantages, as you said of NIKE being a scaled global companies, we can extract learning and insight from each of our markets. And so, here's what we've seen, just to quickly recap, what Andy and I talked about, we’re looking at things through the lens of four phases to this, containment or the outbreak, first; second, recovery period when stores reopen; third, normalization, when things get back to growth from the prior year; and then fourth, return to growth.And the data from actually China, Japan and Korea was fairly consistent. Containment took five to six weeks, stores were closed, but the e-commerce growth in all three markets remained strong during that time, augmented by NIKE’s connecting with consumers around being active while at home. Now, all three markets are through what we're calling recovery. That is retail's opening back up. Consumers are back on the streets. And we're seeing as we move into normalization, retail traffic is coming back. Consumers are in the stores. They're engaged who are often wearing face masks, but they're back on -- back on the street. Interestingly, digital has accelerated even more since the stores have been open. Again, I think pointing to this blended digital versus physical experience is a thing of the past. Consumers don't think in those terms. So, I bring a sort of consumer technology lens, where we learned that consumers want to get what they want, when they want, how they want it. And they don't think about, I'm going to make a digital purchase or a physical purchase.A consumer may often start shopping on their mobile device. They may go into a store and have it shipped at home, they may order online and pick it up in the store. And what we're seeing in Japan, China and Korea is that seamless digital physical experience is responding to what consumers want. And I might notice, our business comes back in those three markets, we’re outperforming our competition, consistent with our mantra of ensuring that we come through this period in even stronger position and extend our leadership position.So, in the U.S., obviously, we're in much -- we're earlier in the cycle. We've closed the stores, we're taking care of our employees. We digitally connected with consumers over the weekend around health and their activity. So, our brand is present, day-in and day-out with them. As Andy mentioned, we're seeing very-strong digital growth, even in these dark days. And we're managing our inventory, so that we can be ready when target comes up.We can't -- none of us can predict perfectly how long the containment phase is going to take in the U.S. and Europe. But, what we can know is when stores start reopening or while stores are closed, we're going to be there digitally. We're going to be there digitally with activity apps and commerce. And when the stores start reopening, we're going to be leveraging our strengths, our unique strengths with strong compelling product, a digital connection with consumers that is unmatched. The seamless digital and physical experiences at both Nike Direct and our partners are working very closely with our partners. In fact, in the last three days, I've talked to the CEOs of Zalando, JD, Foot Locker in the last couple of months, met with DICK's CEO, CEOs of our two Chinese partners. We're working together to be ready, when things recover and then our brands.So, I think it's going to accelerate what was already going to happen with digital transformation. Consumers will continue, digital's a more prominent role in their lives, you'll see more digital growth. And I think the shape of the future marketplace where differentiated retail thrives on differentiated retail struggles that will simply be accelerated. So we intend to drive both.

[Operator:]

Our next question is from Jamie Merriman with Bernstein.

[Jamie Merriman:]

John, just on two of the topics you just mentioned, and specifically how you're thinking about working with partners. Can you just comment on how you think about inventory in the wholesale channel as stores eventually reopen and maybe that by geography? And then, also on the topic of integration of online and offline, could you just update us on how those -- specifically those traditional physical partners are thinking about their own investments and working with you on some of the initiatives that you've put in place, like RFID? Thank you.

[John Donahoe:]

Jamie, I’ll sort of blend it a little bit. And then, maybe, Andy, you can talk through, you’ve been working actively with our partners over the last week on inventory. What I can tell you is what I said earlier is that our strategic partners who are our strongest partners and the one committed to creating seamless digital and physical experiences of the future. Our focus with them is on the future and coming back strong together and coming back in its healthier marketplace as possible.And so -- and we engage with them both around their physical stores and around online. In fact, I was on the phone this morning with the CEO of Zalando, who is obviously a very -- Zalando is a very innovative e-commerce company in Europe, and we are sharing data in very innovative ways around consumers, so that we can offer the best experiences to consumers in a differentiated way in the markets across Europe. And so, the conversations around the future, I think all of them see the same blended or seamless digital and physical experience together that we're committed to creating. And I think we all believe that this is kind of a common ear of differentiated retail versus undifferentiated and they see opportunity. We have to work through these challenging periods together, which we will, but I think all of them see the opportunity to emerge stronger and to accelerate the transformation of the marketplace.Andy, do you want to comment on the inventory specific conversation?

[Andy Campion:]

Yes. So, Jamie, what I’d say is, while obviously there are some elements of these current circumstances that are unprecedented, we came into this circumstance with strategy. And our strategy was 2X Direct. That was a strategy that was not a NIKE-only strategy, it was really focused on driving more direct connections with our consumers, leveraging digital, both in our owned stores, online and with our partners and through their online presence. That's accelerating for everyone right now.So, if you think about the North American marketplace and Europe, with most stores closed both our owned stores and most of our retail partners, what it's really accelerating is that perspective and on the opportunities to connect with consumers digitally from a brand perspective but also expand our ability to connect with consumers from a product and service perspective.When we say partnership, it's not just transactional, it's not a back and forth transactional has a dialogue with our partners. We're talking to our partners about both, how we come through this period and then what we build for the long-term. And there are a couple of things that we're building. We're all expanding our digital pipe, so to speak. We in North America have already doubled the ability, the capacity to distribute product, one to one to consumers through our distribution centers in just several days. So, it's really accelerating what we saw is the future in terms of digital penetration.From an inventory perspective, right now digital is where the water is flowing, so to speak, or where the product is flowing. And so, we're working closely in partnership with folks like Zalando in Europe, as John mentioned. We already have an inventory partnership program with Zalando where we transact via their site and via their digital ecosystem and our digital ecosystem while leveraging each other's inventory. And we're working with our partners in the U.S. in a similar regard, managing the inventory they have on hand, the inventory we have on hand relative to them, and how best to flow that through their digital pipes as well as ours.So, I think in summary, what I'd say is, as John said, it's accelerating quite a bit of change in consumer behavior. It's also accelerating quite a bit of change in our partners’ behavior.

[Operator:]

Our next question is from Alexandra Walvis with Goldman Sachs.

[Alexandra Walvis:]

Good morning. Thanks so much for taking the question -- good evening, rather. And thanks for taking the question. Just tremendous amount of color there and we really appreciate all of the insights. So, my question is on some comments related to gross margins. You mentioned rebates to wholesale partners and higher costs related to factory cancellations in your gross margin comments. I wanted to elaborate a little bit more on those. And would you expect those effects intensify as the issues related to demand reach more of the revenue base?

[John Donahoe:]

Sure. I'll take that question, Alexandra. I think, what we're finding is that there are several levers from the perspective of resetting inventory or supply as one might say relative to the pace of expansion and digital demand, the reopening of stores and then the amount of traffic going to those stores and the amount of conversion. And so, there isn't a sort of one size fits all or not just one lever. So, what we're doing with our own inventory and with our partners is we're looking at a lot of different levers. We're looking at realigning our product offer dates. So, not only do we have some inventory going into these circumstances, but we've got a great pipeline of product and we can move some of those product offer dates out to some extent as we work through this -- the inventory that we'll build over these weeks in which we're dealing with these circumstances in each market.We are primarily talking to our partners about managing inventory movement, the generation -- and the generation of cash flow with a view towards getting back to 14 to 16 weeks or so on hand in the market and 14 weeks or so on hand as inventory for NIKE and strong full-price sell-through. Some of the levers we'll employ in that regard will impact gross margin negatively. That's somewhat obvious. That could be promotion, it could be cancellation of orders. At the same time, none of those data points will represent a trend. So, what you're likely to see in the near term is a focus on supply and demand management that will impact revenue, may have a -- will have a negative impact on margin, but that is part and parcel goes with resetting that foundation for strong profitable growth. It's not a new trend, it's not a reflection of the strength of our product. In fact, John mentioned some of the launches we've had in China. We've actually had some product launches here in the U.S. over the last couple of weeks that have sold through at full price. So, it'll be a blend of working through inventory, which does have some impact on margin and a blend of bringing innovation and fresh, compelling new product to consumers. We probably would be looking for energy and inspiration and optimism.

[Operator:]

Our last question is from Matthew Boss with JP Morgan. Your line is open.

[Matthew Boss:]

Great, thanks. So, maybe on North America, your 7% adjusted underlying constant currency growth I think translates to a mid-teens, two-year stack. Maybe can you speak to what's driving the domestic inflection? Andy, maybe pre-COVID, a little bit of insight, how you were thinking about the North American marketplace over the next 12 months? And just larger picture on the curve where we stand today on the move to differentiated retail?

[John Donahoe:]

Matthew, maybe I'll just make a comment or two and then Andy, you can flush out. But, I’ve spent time now in several of our markets across the U.S. And I've seen firsthand how NIKE’s key city strategy is paying off. Andy mentioned the growth in New York, growth in LA being double-digit. And that is because both with NIKE Direct, and with our partners, we're getting closer to the consumer.Now, I'll just take a couple examples. I had a chance to visit the Foot Locker, very innovative store in Washington Heights neighborhood in New York where the entire display of the inventory and the merchandise and the whole focus is being of the neighborhood. And you can just see consumers responding. And that store is experiencing significantly greater growth than other comparable stores that Foot Locker has in the area.So, it's a great example of differentiated retail and the future of retail. We're doing the same with some Latino communities in LA, providing retail concepts both through NIKE Direct and with our partners that are getting close to what consumers want in those markets and give them more personalized feel. And when you wrap that around with a digital connection with membership, and the other digital tools, you can feel the energy and momentum. And so, I think at its core, this key city strategy that NIKE’s put in place in the U.S. and beyond, is absolutely paying dividends.

[Andy Campion:]

Yes. I'll just add, Matthew that there are few really important drivers to highlight. I appreciate you recognizing that growth has been consistently strong in North America. And obviously, one of the things I should say is we are entering these challenging times in a position of strength. And as John said, strong brands get stronger during these times. So, we think we’ll emerge even stronger.For a little bit of context on the strength we had entering this fourth quarter, NIKE Digital continues to fuel strong growth in North America of a relatively extraordinary 33% in the quarter. We've talked to you about the significant opportunity that we think in terms of the Women's Business. Our Women's Business grew at a rate that was nearly doubled out of men's both in footwear and apparel. So, we're seeing strong growth there.Now, across footwear and apparel, our growth was relatively balanced, both in the mid-single-digit, and that's even taking into account the divestiture of Hurley, which was a largely apparel business and the shift in our business model with respect to the NFL, which is also largely an apparel business.So, what you can infer from that is we've told you we think we have an epic growth opportunity in digital in women's and in apparel. And when you take into account those non-comparables in the quarter, all three, including apparel are over-indexing, in terms of growth.So, again, we feel great about the position of strength we had and have from a brand perspective as we work through these challenges. And we'll be doing everything we can in terms of managing demand and supply and fueling our brand, so that we emerge even stronger.

[Matthew Boss:]

Great call. Congrats on the progress and best of luck.

[John Donahoe:]

Thank you. And thank you, Matt, for your last call. Thanks, everyone, for joining us today. And we look forward to speaking with you all next quarter. Take care, stay healthy and stay safe and be safe everyone.

[Operator:]

Ladies and gentlemen, this conclude today's call. Thank you for your participation and you may now disconnect.