Newell Brands Inc. (NWL) Earnings Call Transcript & Summary

Good morning, everyone. I'm Dara Mohsenian. Morgan Stanley's household products, beverage and food analyst. I'm pleased to welcome Newell Brands to Morgan Stanley's Global Consumer and Retail Conference. Before we begin, for important disclosures, please see the Morgan Stanley research disclosure website at www.morganstanley.com. And if you have any questions, please feel free to reach out to your Morgan Stanley sales representative. So with that, Newell certainly had an eventful year in the last couple of years here, facing some headwinds and some tailwinds from COVID impacts and, in the midst of all these, has accelerated its actions behind the strategic turnaround plan that's focused on returning to sustainable growth and ramping up productivity efforts under a new leadership team. Joining us from Newell today is Chris Peterson, CFO and President of Business Operations. It's great to have you here, Chris. Thanks for joining us.

Thanks, Dara. It's great to be here. Before we get started, I also need to give a forward-looking statement. So please note that today's remarks may include forward-looking statements about Newell Brands. Actual results may differ materially from these forward-looking statements due to factors listed in our SEC filings.

Okay. Great. So with that, maybe we can start with the current backdrop. Chris, obviously, you posted very strong organic sales growth in Q3. You mentioned the consumption trends were also strong in September, and that continued in October. Just as you think about the business, how sustainable is the growth? Some of the strength in areas such as consumer and commercial and appliances, how much of that was sort of pent-up demand versus just inventory replenishment? And maybe put the Q4 guidance of only being flat to up slightly in sort of context relative to the strong growth we saw in Q3 and some of the puts and takes going forward as you think about the business.

Sure. Happy to do so. So when I joined the company about 2 years ago, we really spent the first 3 to 6 months putting a turnaround plan in place. And that turnaround plan, as I mentioned, is really focused on returning or, as you mentioned, really focused on returning the company to core sales growth, driving margin improvement and driving cash flow. I think what we're seeing now is a lot of the elements, as part of that turnaround plan, coming together to really improve the fundamental nature of the business. And so if I think about the top line growth, some of the elements in the turnaround plan to get the company to consistent core sales growth included reinvigorating our innovation pipeline; focusing on meaningful innovation that leverage consumer trends; upping our game in omnichannel marketing; gaining share online and through e-commerce; winning with winning retail partners, focusing on disproportionately growing our international business; and importantly, bringing in a new leadership team, particularly business unit CEOs, who have domain expertise. And I think what we saw in the third quarter is all of that coming together. The 7% organic sales growth was really driven by POS improvement across the business, and it was pretty broad-based. We had 7 out of our 8 businesses grow during the quarter. Every geographic region was up. We did benefit a little bit by a couple of onetime items in the third quarter. We had some inventory replenishment because of shutdowns that occurred during the second quarter. We had a little bit of pull forward from implementing SAP in the Outdoor & Rec business on October 1, and the Amazon Prime Day shift benefited. But the combination of all those things was probably only a couple of points. And so really, the growth was largely driven by POS. What we've seen more recently is that, that strength has continued. And so we've seen continued strong POS growth. So the POS growth that we mentioned in October has continued in November, and we're continuing to see through our latest reads, which I think are through last week, strong POS trends across the business. Our guide, I think, for Q4 reflects some of that. And so we're excited to be back to core sales growth. And we think that we've got the fundamentals in place to continue to drive against that.

Okay. Great. That's helpful. And as you think about your turnaround plan, obviously, there's been a lot of external volatility with COVID. But as you think about some of the key priorities behind that, where do you stand today? How much benefits are left from that? And what's your level of confidence going forward that we're back to sort of sustained growth and that you guys can post that consistently going forward as we look out to next year and beyond?

Yes. I think we feel pretty good about that. I think one of the things that we like to look at is market share. And I think we've seen market share in a number of our businesses turn positive. So we're growing share in e-commerce. We're growing share in the food business unit. We're growing share in home fragrance. We're growing share in the writing business behind the Sharpie S-Gel pen launch. We're not -- we still have a couple of divisions where we've got some work to do, notably Appliance & Cookware, where we're benefiting a little bit from COVID trends but we're not growing share yet. But I think we feel like we've got the right foundational elements in place. We've got the right leadership and team in place to do that, to sustain growth. It is going to be a little choppy quarter-to-quarter because of the comparison periods and because of the COVID trends. For example, the writing business, which is down this year, we expect to bounce back as we come out of COVID and we go into next year.

Okay. And what do you think have been the key drivers behind the areas where you've seen market share improvement so far? How sustainable is that? And then in some of the other areas where you haven't seen as much of an improved share performance, how long does this sort of take to improve the share -- market share profile there?

I think one of the things we did as part of the turnaround plan was we shifted the way that we do in a product -- new product innovation. The company, after the acquisition of Jarden in 2016, have gone to a centralized model where all innovation was tried to be run through the center. And that proved to be a losing model. What we did in sort of late 2018 was we shifted back to a business unit dedicated focus. Because we wanted people that were experts in the category who are only thinking about that category, understanding the consumer path to purchase and developing products that represented a superior value proposition for consumers. And I think where we've done that well, you've seen us return to core sales growth and return to market share gains. And I think we've done that broadly across 5 or 6 of our businesses. I think we have a couple of businesses that are still on the journey. And there, really was a function of getting the right leadership team in place. So the 2 businesses, I think, that we had mentioned previously that we still have a little bit of work to do are Appliance & Cookware and Outdoor & Recreation. And we have hired new business unit CEOs who joined us. Chris Robins, I think, joined us in June. And Jim Pisani, who runs Outdoor & Rec, joined us in May. And they've come in and already started to make a big difference on innovation. So I think you'll see us have a stronger innovation pipeline going forward. I'm excited about the innovation pipeline that we've got next year. And I think that, in combination with our focus on omnichannel and e-commerce, has us pretty excited about the ability to sustain core sales growth in line with our long-term targets.

Right. Okay. And help us sort of understand the contribution from innovation from a top line perspective going forward. Obviously, you talked about the changes that you've made. Any tangible numbers in terms of the expected top line contribution from innovation or number of innovations in process? Any way you can sort of help us frame the innovation benefit going forward?

Yes. It's -- innovation is clearly the lifeblood of this business. And we like to think of things as product life cycle management. And so we don't want to have products that are on the shelf that were launched 10 years ago. We want to constantly sort of be refreshing and updating. Sometimes innovations are disruptive and game-changing in the category. Sometimes they're more sustaining innovations. And we're looking for a mix of those types of things. I would say and by a -- the other thing that's important to note is the product life cycle is different by business. So it's not the same in each of our businesses. But overall, I would say we try to launch innovation that represents maybe 1/4 to 1/3 of our SKU count every year that we're touching in some way and refreshing. And that, we believe, is generally the right cadence for us to focus on.

Right. Okay. And maybe we can shift to margins and thinking about the opportunity relative to 11% base in fiscal '19. How quickly are you expecting margins to sort of rebuild off a 2020 COVID-impacted base? Obviously, there's a lot of strange dynamics within 2020. So should we be sort of looking to '19's base more to frame the longer-term opportunity? Or how do you think about that? And then secondly, are there big cost savings opportunities, productivity that's opened up post-COVID? Obviously, you guys had a lot of plans already in place pre-COVID, so maybe give us an update on that, but also if there could be larger opportunities that opened up post-COVID?

We think that there is significant operating margin opportunity still ahead of us. So I think at CAGNY 2 years ago or 1.5 years ago, when I first joined the company, we had done a benchmarking study. And at the time, I think our gross margins were about 34%. And we thought that based on the benchmarking data, we should be at 37% or 38%. So we have 300 or 400 basis points of opportunity versus that sort of '19-type base in gross margin. At the same time, on overhead cost, in 2018, the company was at 21% overhead as a percent of net sales, and we thought that the benchmarking would suggest that we should be able to get down to 16% or 17%. We made a big jump down in 2019 from 21% to 19%, but we still have 200 or 300 basis points of improvement opportunity there. We probably, as we drive gross margin improvement and overhead cost reduction, will reinvest some of that money back in higher A&P as the innovation pipeline ramps up and allow some of it to drive to the bottom line. I think in our long-term model, we've talked about 50 basis points a year of sustainable operating margin expansion. It may be a little different than that 1 year to the next. If you look at this year, for example, our operating margin this year is going to be relatively flat in '20 versus '19, despite taking 100 basis points of additional COVID costs in the gross margin line. And I think one of the things that we've done, as part of the turnaround plan that I'm pretty excited about, is the program on productivity, which we internally call FUEL. The company, prior to the turnaround plan, did not really have a focused, sustainable, systemic process to drive gross margin productivity. We've now put that in place. And this year, we're on track to take 4% of our cost base out through the FUEL productivity savings program. That's being eaten up a little bit from inflation and FX, the extra COVID cost and some of the business unit mix. But we believe that, that FUEL program is an evergreen program that's going to continue to pay dividends. It's not one big project that we're driving from a productivity standpoint, the FUEL program, if you got under the covers of it, what you would see is that there's 200 or 300 significant projects that are being executed across the company that are driving that type of savings and probably another 1,000 smaller projects that are helping to drive that level of cost savings.

Okay. And as you think about advertising spending longer term as a percent of sales, has anything sort of changed here post-COVID? What we're seeing from a lot of companies is large cutbacks on ad spend, those that have been negatively impacted by COVID. And there may be a belief that not all that needs to be added back longer term. So just curious from your perspective there how you think about that ad spend as a percent of sales versus 2020 base over time. Actually, also, with some of the cutbacks recently, are you sort of realizing there might be greater areas of efficiency or places you weren't getting a great return in this COVID environment?

Yes. So we've been pretty agile with our A&P spend this year. And the reason for that, in our case, has been largely supply disruption. So we've had some categories that have seen very accelerated consumer demand trends where we are capacity constrained. And in those environments, obviously, it doesn't make sense to continue ad spending if you can't supply the product. We've also seen some categories where initially, when COVID hit, we had to close some of our manufacturing plants by government mandate and distribution centers. And so in those cases, we also hold back on advertising. I don't think that we believe that there's going to be a sustained pullback in advertising and promotion spending in our case. I think that we feel pretty good about the level that we are at right now for the current environment. But I think what you'll likely see us do is increase our level of A&P as a percent of sales even heading into next year in 2021. But we believe that we've got more than enough opportunity to fund that through overhead cost reduction and gross productivity savings and gross margin improvement so that we expect that we're going to take -- we're going to improve operating margins at the same time.

Great. That's helpful. And then I know one of your favorite topics is cash flow. And under your leadership, you've made a lot of progress in driving working capital improvements and improved cash conversion cycle and cash flow. From here, how much opportunity is there? As you look out longer term, how do you think about sort of a normalized level of operating cash flow in the core business looking out over time? I understand there's a lot of volatility in the near-term here.

Yes. So again, at CAGNY 2 years ago, I had done a benchmarking, and I think our cash conversion cycle at Newell was 115 days. And that positioned us squarely as the worst in class in the industry. And so I looked at that 2 months into joining the company and thought, "Boy, this is a huge opportunity for us." And so we had done a benchmarking and said that we thought the opportunity was to get down to 70 days, which would get us sort of at the median of peer companies that we thought were comparable to us. In 2019, we went from 115 days down to 98. And so -- and year-to-date through the third quarter of this year, we're down another 30 days. And so we are making aggressive progress at getting down to that 70-day number. We'll see how we end at the end of this fiscal year. But certainly, we have a lot of opportunity on working capital. We've already realized a significant amount of it, but I continue to believe that there's more ahead of us. And it's really in all 3 areas. We've got opportunity to collect our receivables faster by resolving deductions faster and systemically, eliminating deductions from happening to begin with. And we're making progress there. We've got opportunity on inventory through things like improving our forecast accuracy, reducing our SKU count and reducing our excess and obsolete levels of inventory, which we're making very good progress on. And we've got opportunity on accounts payable because we were paying suppliers faster than our peer group. And so we've made an aggressive approach at renegotiating with our suppliers to extend payment terms. And there's still runway ahead of us. I think if you look out over the next couple of years, we've set a goal of having our free cash flow productivity be 100% of net income -- of our adjusted net income. And I feel pretty good about that target over the next couple of years.

Great. And then over the last couple of quarters, there've been a number of leadership changes and additions to the team. A, I guess, first, you sort of have the slate of people in place that you want. B, maybe you can talk a little bit about some of the changes under Ravi's leadership as CEO since he's come on board. And then I'd also be curious for sort of how these changes are manifesting themselves in Newell's culture, whether it be with executives or Ravi's leadership and how you think that's progressing at this point.

Yes. So I'm pretty excited about it. I think that I got a little bit of an echo there, but it seems to be gone now. I think that Ravi has come in, and when he came in, he spent the first 3 months on sort of a listening tour, getting to know the business, understand the situation. And very quickly, he endorsed the turnaround plan that we had developed about 6 months before he joined. And I think what he's done has been additive to that in terms of the execution of it. So under Ravi's leadership, we brought in 4 new business unit CEOs out of the -- to run our 8 -- out of our 8 businesses. And I think the people that we brought in have been very strong players with real domain expertise in the areas in which they're leading. And so that's been a big boost for the company. I also think that the culture has gone from a culture that was somewhat knee-jerk and short-term-focused prior to 2018 and '17 to a culture that is much more of a winning medium and long-term-focused culture. And so if you were in the company today, what you're seeing us do is take decisions and try to make fundamental process, people, technology changes so that we can systemically deliver against the long-term goals. And I think we're starting to see that play out in the financial results. And I'm pretty optimistic about the direction that we're headed.

Great. And then looking at the promotional environment, obviously, Newell has got a diverse category mix, some of which aren't as well tracked. So I think it would be helpful just to hear, in general, what the competitive environment has been like the last couple of quarters during COVID, promotional levels and what you expect going forward as you look out to 2021. Is it a more normalized environment in your mind? Or does it take time to get back to a more normalized environment?

Yes. This is one that's a little bit harder to predict. But what we saw when COVID hit was both we and most of our competitors really pulled back on promotional intensity. And the reason for that was because, in some categories, you saw demand really dropping significantly, and it didn't make sense to try to promote -- to chase a reduced demand scenario. In other categories, we saw demand increased exponentially. And when you were supply constrained, it didn't make sense to promote. And so I think both us and the competitive set really pulled back on the promotional intensity, and we're seeing some benefit from that in the core sales growth figures that we're reporting -- that we reported in Q3 and what we're seeing to date in Q4. I do think that, over time, it probably returns to a more normalized level. I think that's what we're planning for, but I don't think it snaps back quickly. I think it's going to be a couple of year journey to get back to a more normalized level. And I think the reason for that is I think that there are still, today, are a number of categories where supply is an issue. And I think it will take a while for that supply situation to really normalize out.

Okay. And can you also talk a little bit about advertising spending from competitors, what you're seeing your share of voice in some of the categories you compete in? And does that come back quickly also? Or is it more of a gradual return like you just discussed with promotion?

Yes. So in our case, most of our advertising and promotion spending is digital in nature. We do very little traditional television, print type of advertising. We do a lot of advertising on social media, search engines and that type of thing. And that's really where we see most of our competitors advertise as well. And what we're seeing in that space is not a dramatic change in investment. We're seeing some change in investment in -- but it's really more supply-based than it is demand-based is what I would say. So in categories where competitors were -- we are supply constrained, the spending levels are lower. In categories, as they open up and supply comes back, it returns to a more normalized level. We feel pretty good about where we are. We've been gaining share online broadly. So I think our e-commerce penetration now is up to 21% of our global business is done through e-commerce, which is a very, very strong figure. And in the U.S., it's actually 30% of our business is done through e-commerce. So it's even higher. And the important thing about that for us is that our profitability online is consistent with our profitability in brick-and-mortar channels. So it is not a mix problem for us as consumers shift online. We figured out a way to make that so that it's actually margin neutral for us. And we're well positioned to capitalize on that shopping trend of buying online.

Great. And then shifting to your individual business units. Obviously, the Back-to-School season in Writing was unsurprisingly weak, with more of a shift to virtual learning this year. How much confidence do you have post-COVID that the business can return to growth? What's the visibility on when that might occur? And how much of the weakness is more temporary just with people being at home versus maybe more of a shift to digital that could impact sales longer term? I know that's a difficult question to answer but perspective on it would be helpful.

Yes. We -- on the Writing business, I'll give you a couple of thoughts. So the first thing is, this was the year that we launched the Sharpie S-Gel line of pens. And we declared it from an innovation standpoint, the year of the pen. We launched -- we decided to go ahead and launch, even though the launch happened right about the time that COVID was hitting. And we're pretty excited about it because in the gel pen segment, we've gained 9 share points over the last several months. And in the overall pen market, we've gained 3 share points, so we have been clearly the share -- market share winner in that category. As you rightly point out, the market has seen a contraction. And really, it's 2 things. It's the Back-to-School season, which was clearly depressed in July and August. It's also the office environment. And the office environment represents about 1/4 of the business. And as offices have closed, that also has had a negative impact on the POS. I think the thing that's interesting is, since September, we've seen POS trends actually turn positive on Writing. And so POS in September and October and November have been positive for the Writing category versus a year ago. Now that positive trend in September, October, November is not enough to make up for the negative in July and August. And so what -- where we are now is we're bleeding off retailer inventory from that positive POS trend. I think as we shift forward to next year, in thinking about the Writing business for 2021, I think we believe that it's likely that kids will go back to school in September of next year. And if that happens, we believe we're going to be very well positioned to capitalize on that. And we should see a bounce back in the Writing business, which, of course, is our highest gross margin business. And so that should benefit us next year from a mix standpoint.

Okay. And then on the opposite side, I guess, Appliances & Cookware, clearly, it's accelerated the past couple of quarters. How much of that is more temporary, consumers staying at home versus a dynamic that could continue to benefit you longer term? And pre-COVID, this was one of the segments with a multiyear turnaround plan. So what are sort of the major points to improving performance in this segment over time sort of ex-COVID at this point?

Yes. So on Appliances, there's no question that we've benefited from accelerated consumption due to COVID. And that trend also has continued. So we've continued to see strong POS trends into October and November in the Appliance business. So there's no sign that we've seen that the consumption trend is slowing down relative to consumer offtake. I think the thing that we're excited about in this business is we've recruited and hired a new business unit leader, Chris Robins, who joined us in June. She has a very strong background in the Appliance business that's based on product innovation and outstanding marketing, which is what that business desperately needed. And we're already seeing some positive trends. For example, we launched just 1 month or 2 ago a Mr. Coffee iced coffee maker. And it is off the charts. We sold out our entire allotment in the first, I think, week or 2. And so we're now scrambling to have supply. So we're starting to see some green shoots on innovation. But there is still more to do on Appliances. We are not yet to share growth. Although we are to POS growth and core sales growth, we've got work to do because our aspiration is to get the market share growth in that business over time.

Okay. And then in Outdoor & Recreation, you also returned to strong growth in Q3. I know some of that was SAP timing. Off this year's sort of COVID base, how do you expect to perform longer term in what historically has been a segment where you had more challenges than the rest of the business?

That business, I'm a little bit more optimistic on relative to -- it's really a business that you can split into 3 segments. There's the outdoor business, which is largely the Coleman brand. And on the Coleman business, I think we've done a good job at reinvigorating the innovation pipeline. Our most recent discussions with our top retailers looked very promising relative to distribution gains for next year on the Coleman line of business in North America. And I think we've brought in new talent, both in terms of the business unit leader, but also underneath that person on the Coleman business that is driving us in a good direction. The second business in that segment is the Contigo beverage business. That business has been negatively affected from COVID because of less on-the-go movement, which requires less beverage containers. We're in a strong market position there, but we need that -- we need the consumption for the category to come back, for that business to rebound. So I think that business is well positioned as we come out of COVID to have a rebound. And I would say the same thing on the Marmot business, which is technical apparel, which has probably been the category that has been the most significantly negatively affected from COVID. But I think we brought in a new leader there. We brought in a new designer and a new head merchant. Jim Pisani comes with a strong background in apparel -- outdoor apparel, having been the President of Timberland. And so I think we're well positioned for that business to recover as the market for apparel recovers as well. So I think on Outdoor & Rec, we are likely to see a tough Q4 on that business, and that was certainly factored into our guidance because of the SAP pull forward and also because, in Q4, the Coleman business is really a seasonally low business. And so you really see more of the impact of Marmot and Contigo in Q4. But I think you'll see us have a stronger 2021.

Okay. And then in Home Solutions, can you give us a similar view between food versus home fragrance? And also, separately, as you think about the Yankee Candle business, you've had some retail store closures there. Where do you stand in terms of the retail footprint and how you think about the business?

Sure. So both businesses have been real standout strong performers for us. The Food division has probably been our strongest performer. And it's really hitting on all cylinders. So it's benefited from the at-home consumption trend, which has accelerated consumption trends for the category. But importantly, we've come out with very strong innovation, with things like Rubbermaid Brilliance Glass and others, a new vacuum sealer, et cetera, that are driving market share gains. And so we're benefiting both from growing market share across all of the businesses within the Food division and the category growing at a faster rate. And we're pretty optimistic about that trend continuing. We have seen no slowdown in that trend. And so I think there, we're going from strength to strength. Again, that's a business that we brought a new leader in earlier this year. And I think Kris Malkoski, who's come in, has done a great job of driving product innovation, driving outstanding omnichannel marketing and taking us sort of from strength to strength. On the Home Fragrance business, we've been on a multiyear sort of mix improvement strategy. And so this is a true omnichannel business where we have retail stores, we have e-commerce -- direct-to-consumer e-commerce and we have a business through retail partners. In 2018, about 30% of the business was through the Yankee Candle retail stores. We've been moving the business away from retail stores, more to direct-to-consumer online and to retail -- through retail customers like Walmart, Amazon and others. And part of the reason we've done that is because the profitability in those other 2 channels is much better for us than the retail store channel. So in 2018, we had 550 Yankee Candle stores. We closed, I think, 75 in 2019. We've already closed 75 this year. So we're down to about 399, I think, at the end of the third quarter. And today, if you look at the past 12 months, the Yankee Candle retail stores represent less than 20% of the business. I think you'll see us continue to rationalize the retail store footprint. We're not getting out of the retail business. But I think we're going to continue to rationalize as leases expire. And as we put the strategy in place there, the good news is that when we put the turnaround plan in place on that business, we've stopped signing long-term leases. So most of our lease exposure is short term in nature, which is going to allow us to pivot quickly in a way to take advantage of the current environment. So I think that business also grew in the third quarter, and we're continuing to see strong consumption demand in October and November for the Yankee Candle business. So I'm pretty optimistic about the mix shift that we're driving and the opportunity for sustainable growth in that business.

Okay. And maybe we can touch on your commercial business. Also, obviously, potentially your ability to prosper on the cleaning side there. Can you talk about expansion opportunities over time in that business here post-COVID with more of a focus on cleaning and how you guys see the opportunity there over time?

Yes. That business has been another star performer for us. So we delivered strong growth in Q3. I think we're continuing to see those trends into Q4. And what's interesting about that business is we supply a number of different verticals, where we've seen very strong performances on sanitation, on cleaning, those elements of the portfolio on refuse, outdoor. And we expect those trends to continue because we're not seeing any slowdown in that. But that business also supplies things like the restaurant and hospitality channel. And in those businesses, we've seen a market reduction in revenue. But the positives have more than outweighed the negatives, which is why the overall business is growing. And so as we think about a post-COVID environment, we actually think that we may get a boost from the restaurant and hospitality segment and continue to drive the sanitization, cleaning and outdoor parts of the business. And so we think we're well positioned there to have strong sustainable growth going forward based on the innovation pipeline that we've got. Just an example there of innovation. One of the things we sell is a Rubbermaid storage shed, which is a big shed that you put in the backyard. We came out with an innovation on that product. It used to take 2 people, I think, 6 hours to set up a shed. The new shed can be assembled by 1 person in 2 hours. And so it took a lot of the pain of buying that away. We launched that product, I think, about 3 months ago, off to a very strong start. It's an example of bringing innovation even in a business like that, that can drive strong customer and consumer demand.

Okay. And then you mentioned your large presence online. E-commerce is now 21% of sales mix. In the U.S., it's well above that. Can you discuss your sort of strategy in e-commerce, where you stand versus peers in terms of market share, offline versus online and how you've been able to drive success there and maybe some of the investments you're making or strategic priorities to drive continued growth going forward?

Yes. So that's been a real focus for the company. And I think we've made very strong progress. I'll give you 2 things that we've done in terms of investing behind that, that I think positioned us well going forward. So the first is we had a digital studio in-house in Hoboken, New Jersey that produced digital assets that allowed us to win on both pure-play and retail.com assets or websites. We've doubled the capacity of that group. And so we now have in-sourced effectively the ability to create digital content. What that allows us to do is to create dramatically more digital content. We now have the ability to create video to have A-plus content on a large number of retail websites. And by doing that, we're finding that we're winning the buy box more often. Our ratings and reviews are better, and the consumer shopping experience is much stronger. And we're able to drive digital content. It's about 80% cheaper for us to do it internally than using an outside agency, and we're able to do it about 3x as fast in terms of our turnaround skew. And so that's been a huge focus for us. The second thing that we've done is we've re-platformed our digital infrastructure platform. And so -- and this has been a big effort that we started about 2 years ago, where the company previously had all of its different businesses on individual, disparate platforms and a lot of websites, a lot of complexity. We went through a strategy of picking a single module for each of the different elements of what's required to win online. So things like having a single content management system, a single digital asset management system, a single social listening tool, a single order management system for our direct-to-consumer sites. And that platform, which we internally called [ Odyssey ], we've now got rolled out. And we've got 85% of our business now on to the new platform as of the end of the third quarter and will be 100% of the U.S. business on this new platform by next summer. And that's allowing us to significantly improve the consumer experience on our websites as well as our retail partner websites. So for example, our page load times have come down, in a lot of cases, by more than 50%. Our bounce rates have improved. Our conversion rates have improved. And we think we've got a strong platform and a strong digital creative capability to continue to drive e-commerce strength. And we're seeing that. I think in the third quarter, our e-commerce business was up over 40% on a core sales basis versus 1 year ago.

Great. That's helpful. And another growth area potentially is the international business outside the U.S. It's about a 1/3 of your sales. As you think about that business, is there significant expansion potential? What are the biggest growth areas that could come over time on that business?

Yes, that's right. So the U.S. business is about 2/3 of our business. And I will say that our primary focus is on the U.S. business because it's 2/3 of our business. That being said, we continue to believe the international business is a disproportionate growth opportunity for us. And we saw that in the third quarter, where we grew every geographic region. And we grew our international business faster than our U.S. business. And I think the reason for that is because our market share positions internationally are not as strong as they are in the U.S. And so we have more opportunity to grow. I think our strategy in international is going to be to focus on our top markets. We generally are a developed market company. So we have very little presence in developing markets, but we have strong positions in developed markets, with still opportunity to drive market share gains. And so I think what you'll see us do is invest in selective white space expansion, but growing market share in the markets where we are currently in. And I think that strategy we see should lead to an international growth rate that is -- that's higher than the domestic growth rate because of the opportunity there. Maybe a simple way to think about it is, if 1/3 of the business today is in the international markets, probably 2/3 of the global market is in the international markets. And so we continue to be underpenetrated there and see growth opportunity.

Great. Well, that's a really helpful overview. We really appreciate your time, Chris. It was informative. And with that, we're out of time, so we'll end things here.

Very good. Thank you.

Thanks so much.