Olaplex Holdings, Inc. (OLPX) Earnings Call Transcript & Summary

Hello, everybody. Thank you for joining us. I'm Jonathan Keypour. I cover OLAPLEX on the Bank of America HPC and beauty team. Today, we are joined with -- joined by OLAPLEX. We have JuE Wong and Eric Tiziani here with us. It's a pleasure to have you. Thank you for coming. I want to thank everybody else who is attending in person as well as online. Thank you very much. I guess before we get started, I'm supposed to mention the safe harbor statement for OLAPLEX can found online. I think that covers our bases, and we're ready to go, more or less.

I guess just to start, some -- to get the ball rolling, some questions just about, what is OLAPLEX? What does OLAPLEX do? What is the value proposition for consumers who use the product, retailers and investors?

Thank you for the question. And thank you, everyone, for taking the time. I know the weather out there is truly frightful. So I appreciate you being here. So first of all, maybe I can carve like as a consumer, marketer, and everybody thinks they are a marketer. Let me give you kind of 3 little sentences that defines who we are, and then I'll unpack it a little bit more. OLAPLEX is inspired by salons. It is proven by science, and it is powered by passion. And how does that 3 things break out? When we say we are inspired by salons, our roots are in the professional sector. You will have heard from Eric time and time again, the relationship between a professional and their client is like a doctor-patient relationship. And that is what OLAPLEX brings to the table when it comes to authority. When we say we are proven by science, it's our technology. We are patent-protected, proven and potent in addressing hair bonds. Because hair bonds is agnostic. It doesn't care whether you're young, you're old, you're male, you're female. Whatever ethnicity, your hair bonds needs to be repaired. Even just sitting here, by virtue of the fact that every minute is ticking, your hair is getting older and it's getting damaged. And then finally, we are a disruptor in the business. As investors, you have looked at our financial profile. You know we are high growth, high margin and high cash flow. When you have all of those 3, it gives you the opportunity for white space and for us to be really efficient and productive. Hopefully, that covers for you who we are and what our value proposition is, especially to you, as investors, as well as to our retailers and our trade partners.

Great. I guess you guys are both relatively new additions to the OLAPLEX family. If you could maybe delve into what attracted you to the company, what brought you in, that kind of thing.

Thanks, Jonathan. Hi, everyone. So yes, I joined OLAPLEX as the CFO in June of last year after nearly 23 years at Unilever. And I would say this, for the better part of a decade, I was doing M&A in some way, shape or form; looked at many, many companies in the beauty and well-being space, big, small. And when I saw OLAPLEX, I had a moment of, holy cow, this is a business that has literally cracked the best of all worlds, the best of all worlds and each element of its business model. I had never seen that before. And you see it in the performance of the business, and you see it in the financial profile of the business that's so unique. And obviously, that caught my attention, the chance to be a part of this winning team, disruptive team and just passionate team. And that was all when I met JuE and I met some of the other leaders of OLAPLEX and I said, "This is what I've been waiting for. This is the one I want to join."

Great. Same question to you.

Thank you, Jonathan, and thank you, Eric. I mean, like you can tell that OLAPLEX is a very special place. I mean when -- like Eric, when I first saw the financial profile, as in my due diligence, I kind of like told myself, this can last, just like maybe some of you are sitting in the audience thinking the same thing. And 2 years later, the company has gone IPO. The results are not only sustainable as we have seen it. What I'm seeing is that we are just at the tip of the iceberg. When I realized all this, it made my decision fairly easy because I have done 5 turnarounds in my life; 1 growth brand, which was Moroccanoil. And when I look at all of that, the common denominator in all of those problems was -- in all those brands was that I had to fix something. This was a brand that did not need fixing. All it needed was more acceleration and powerful growth. And I knew that if people will come along with us on this journey, that this company can do well and do good. And that attraction was just too good to say no to.

Great. So I guess switching out to a little more about the business itself and the category subtending it. So in some of the marketing material around the IPO and looking at Euromonitor and the like, we see hair care is $80 billion, is a big TAM; growing mid-single, depending on where in the value chain you guys are. OLAPLEX is growing well above that. It's very obvious. 25% compounding growth was the old kind of target, and it seems like we're slated to -- at least in the short term, we're doing better than that. I guess just discuss some of the key growth drivers. I guess we can start with maybe geography. The U.S. and U.K. seem to be leading the way. Where do you see more of the medium-term and the long-term growth drivers coming from internationally?

Yes. I'll take that one, Jonathan. Let me say that one of the beautiful things about our business model is how diversified our growth has been and is expected to be. So very broad-based, broad-based across geographies. So in the U.S. and internationally, already over 40% of our sales is outside of the U.S., broad-based between our core and the launching of new products and innovation as well as existing distribution accelerating as awareness rises all of those boats, but also finding new distribution points in each of our channels. And that's the last piece, broad-based growth across each of our 3 channels in that specialty retail, direct-to-consumer and the professional channel. Specifically, geographically, we see the opportunity to take the repeatable model that we've established in the U.S. and other key markets like the U.K. and apply that to similar markets to get accelerated returns. We're seeing that come to fruition. Last year, we've given the example of markets like Italy and Spain, which really took off as we applied that omnichannel model. We see other opportunities that we're very excited about in Asia and Latin America as well on the geography side.

Right. Great. I guess a lot of the questions we get are about, where is the outperformance going to come from? Where could we see flex upwards in the model and all that? I want to ask in the -- of the 3 segments that you guys have, sort of which is the most likely to provide upside? But I think a fair question is in each of the segments, what can provide the upside? Because it seems like there's flex in each -- in all 3, there's sort of -- I'm just wondering specifically what are the 2 or 3 catalysts in each of them that could push numbers.

Yes. I would say, again, it's going to sound boring, but it's broad-based. And again, it's not one particular channel. It's not one particular market. It's not an overreliance on new products versus the core. That's how we've been growing. That's how our business model works. That's how we expect it to go in the future. How could that accelerate in a broad-based way? We're still in the early innings. We're still really, what we think, in the beginning of our journey, awareness of the brand. Even in a market like the U.S., where we're strongest, it's still at relatively low levels. So we're doing everything that we believe we need to do to increase that awareness, bring people into the brand. We're leaning into our disruptive sales and marketing model. I guess what could surprise on the upside is all of that just works faster.

Right. Right. Okay. I guess it's worth probably addressing given what's going on in the world, there's all sorts of questions people have about -- you guys addressed the Europe situation, very minimal exposure. I guess another one of the key themes that the people are still interested in is the reopening scenario once COVID is finally fully gone. Do you guys see any changes in consumer behavior or how that may or may not play out? What are you guys expecting, that kind of thing?

Eric, do you want to take that too?

Yes. I would just say in terms of reopening impacts around these -- let's face it, we've had so many different stages of the pandemic. I don't like to say post pandemic. Which part are you talking about? We've got starts and stops. We are not currently seeing any real impacts in consumer behaviors around how they're shopping OLAPLEX around the pandemic. So we don't see, looking forward, another shift or pivot that hasn't already happened, frankly. The question is, what about Omicron? What impact did that have on our business? Frankly, in January, it's a lot like what we lived through. It was a bit of a blip for 2 weeks. Labor, appointments and the professional channel may be slowing down, but all of that recovered quite quickly.

Okay. Keeping on the theme of volatility and that kind of thing, there was this issue with one of the ingredients of the -- perfumes in the No. 3 product. That seems to have come and gone a little bit online. I'm more interested about what you guys are seeing. And any explanation you want to layer on to the discourse regarding that issue? And I guess I'll let you guys take it away.

Yes. I think one of the things that we want to make very clear is that there has been no material impact in our business because of the mitigations that we shared with you yesterday on the earnings call of what we did. And I think what is important is it was really reflected in our guidance as well. If we thought that this was going to be an issue, our guidance would not have been as strong as we did for the 2022 guidance that we provided. And more importantly, as of today, we have already seen, any of the Google searches, on Twitter, on our own Instagram platform, that has already become a nonevent. So I really want to kind of like double down on the fact that let our guidance speak for itself.

Great. In terms of competition and the landscape overall, I was just wondering if -- since you guys made the big splash with the IPO, what kind of response have you seen in the competitive world? And more importantly, how do you guys foresee positioning OLAPLEX to sort of rise above it and continue getting the message out?

We actually believe that competition is really healthy, right? Competition brings awareness. You've heard from Eric just now where we talk about the #1 thing that -- people, when they do not know about OLAPLEX, it's not because OLAPLEX does not perform for them or does perform for them. It's that they ask who is OLAPLEX? So that runway, the opportunity is tremendous. And when more people enter into the space, it gives credibility to the area. But more importantly, OLAPLEX is known as the bond builder. But we are actually more than being bond builders because our ingredient really addresses all types of damage, but the bond building category is being so highly exposed now by the competition that they will use the word more as a marketing rather than an efficacy, and we have the technology to protect it. We have a set of patents that protect our performance, another set of patents that you will have heard us said that has other applications that we could or could not commercialize or may or may not commercialize. And then we have another set of patents that acts as a competitive moat against the performance for hair care. All of this just means that somebody may want to enter into the space but will find it very difficult to make the same or deliver the same performance that we have.

Great. I guess next on the hit list of things people keep talking about on earnings calls is the inflation environment, that kind of impact. You guys mentioned on the call yesterday some -- you're going to see some gross margin impact this year. I'm just wondering, in terms of pricing and other mitigating actions, cost controls, savings, that kind of thing, what actively are you guys putting in place? What could we maybe see? What could pricing look like, that kind of thing?

Yes. I'll take that one, Jonathan. We're obviously monitoring the cost inflation landscape very closely. It's very dynamic. What are we doing about it to mitigate? Absolutely, we work with our suppliers, our partners to get the best pricing for whether it's components or manufacturing. And we have to point out, we've been growing so quickly that we can leverage the efficiencies that come with our partners, more scale, more efficiencies in how those products are produced in the negotiations about that inflation. That's one thing. The second thing is we're constantly looking at opportunities around our operations to be more efficient. It could be how we develop our third-party manufacturing or third-party logistics network in the future as we look to continue expanding capacity and reach all the different points that we sell in the world. And then on pricing, tactical pricing, always looking at opportunities. What could that mean? It could mean how we're going to price a certain new product or kit that's coming out. It could be how we're going to price in a particular market, let's say, maybe a currency has moved one way. Those are always levers that we're pulling to help mitigate cost inflation. And then I'll end with strategic pricing. A more broad scale pricing action is not what we've put into the plan. It's a lever that we think is available because of our very strong brand equity. We'll continue to monitor the situation and respond accordingly.

Right. I guess in terms of the cost buckets -- and inflation is just so broad. If you could sort of -- where is the biggest pressure coming from? Is it the input cost that goes into the actual product itself? Is it labor? Is it freight? What are the relative levels of those?

Yes. I'll break it down simply. And I will say for all of us, that picture is changing very quickly on a weekly, if not daily, basis. But what we've experienced and what we've seen is similar to others in that logistics, transportation, double digits; input costs into our products and labor related to how we get them to market, let's say, closer to mid-single digits.

Okay. I guess you touched on the third-party manufacturing, your contracts, all that kind of back end that gets the product out. I guess if you could maybe elaborate on how often those are renegotiated, the process there, potentially how you go about sourcing new manufacturing capacity, that kind of thing.

Yes. We have wonderful partnerships with our third-party manufacturers. We have contracts in place. From time to time, as appropriate, we will engage with them on discussions around cost increases that they're seeing or feeling, and we will discuss accordingly. That happens typically on a 3- to 6-month basis, but also, I'll say, as needed and as appropriate. And in those discussions, again, we leverage the fact that we've been very successful, and we've been growing very fast with them. In terms of how we build out that network in the future, we've got great existing partners that we can grow with even further. We start -- we try to stay way ahead of this. So the conversations we're having now about our capacity capabilities network is looking ahead to what do we need 2 years plus from now to deliver against our plans.

Great. That answers 2 of my questions. So that's -- on to the next one. So OLAPLEX discussing its growth drivers outside of current markets and categories being longer term, we've heard about China, but that seems to be a little bit further out than maybe the medium term. Has any of the time line -- geographically or by channel, has that accelerated at all since the IPO? Or is it basically still following along the time line? Basically, any acceleration in pulling those growth levers at all?

So one thing about us is that we are very focused. We know that -- as you have heard from Eric, again, we are just starting out in this hair category. The hair -- prestige hair category is the fastest-growing category in beauty, and we know that we are leading. We are defining it. We are shaping and disrupting this category. So for us, we want to make sure that we go deeper with our existing distributors, existing trade partners, existing retailers. And that when we do that well, what ends up happening is the support, the optimization of marketing and digital collaboration with all of them would just mean that we can build on that awareness. So the focus on it is to continue to build what we have, to build it better. We are now the #1 hair care brand across all of the retailers we participate with. We now want to become the top beauty, if not in the top 5 to the top beauty brand. And by doing all that, we'll just help amplify our awareness more and allow more customers to get to know who we are.

Great. Now I guess pivoting to marketing, this has been a pretty important piece of the discussion. I'm just wondering in -- over the next 1 to 2 years, how that should evolve. I know that you guys use a lot of -- you lean heavily on the professional network, and it works to build the base. But how might that look as the company moves from a sub-$500 million company into a hopefully $1 billion company, all that kind of thing? How that should progress.

Yes. I think one thing for us that is nonnegotiable is that we want to continue to focus on data-driven performance marketing. I think what is important for us is when something works, there is no stopping us from really investing more behind it, unless Eric tells us not to because he controls the wallet, so to speak. But it is very clear for us that our community built is something very critical for us. And this is not something that somebody can wake up one morning and say, "Oh, I know how to -- I know that the community is important. Let me go build this community." It takes time. It's relationship. All of you who have been in relationships understand that you don't go from -- you don't go to a serious relationship without building and investing behind it. And that is what we have done. The other thing that is important for us is that technology constantly improves. 5 years ago, the digital landscape, the social commerce landscape wasn't even really mature. Today, we are all asking ourselves, what is after TikTok? And that, I think, is really where we, as a company, is constantly looking ahead. We're looking ahead of the curve where we can be relevant. And then finally is making sure that whatever we communicate, we collaborate with, like I mentioned, with our retailers so that the amplification is not only nationally, it is a national retailer, but globally, it is a global retailer. So I find that it is not just about looking at what could be done. It's where we can go. And then finally, I will just end, we are constantly researching as to where our consumers take their learnings from and how do they make decisions in -- making a hair care purchasing decision. And what we are finding consistently when we measure their temperature, first and foremost, is they want to take learnings and recommendations from their hair stylists. 67% of the customers we poll tells us that. Another 30%, 34% says that word of mouth from friends and family. And another 30-some percent basically said product reviews, independent product reviews. We are clicking on all 3 of those metrics, and we believe very strongly that if we keep true to our core, the marketing is just going to help us get more of the message out.

Great. I guess we're just under 15 minutes. So I want to open it up in case -- I have a few more questions left, but I just wanted to poll the audience and see if anyone has anything they want to ask.

One back there.

So can we -- can you give us a sense of as you've moved into Sephora and now Ulta, right, so there's more of a retail, brick-and-mortar footprint, has the consumption, so the consumer for OLAPLEX changed at all? Meaning are they using more of the products, the wider selection within the range? Are they purchasing it more frequently or less frequently than someone who was maybe purchasing at salon? Just trying to get an understanding if that consumer behavior in those channels is different maybe than what we see in salons.

Yes. That's a good question. And let me just give you some key data points to kind of show you that the synergistic omnichannel we have is actually reinforcing. 35% of the stylists in our community actually recommend products to their clients to be purchased outside of the salons, whether it's in brick-and-mortar or on direct-to-consumer platforms. And 50% of our direct-to-consumer platforms, customers also buy at brick-and-mortar and retail. And that is why during the road show, some of you heard us say that the average purchase was anywhere from 3.6 to 4, and that average has actually gone up to slightly above 4, as you've heard from our earnings call from our prepared remarks yesterday. And that really goes to show that the adoption rate is getting higher. And more importantly, the skinification and the virtualization of hair care is resonating with the consumers. Very similar to skin care, if you have asked somebody almost like 10 years ago how many products do they use in skin care, they will tell you anywhere from 3 to 4. Today, it is not uncommon to hear a woman telling you that they use about 8 to 10 products in their regimen. So we are seeing that the profile of our customers is very much like skin care, and they're cross-channel shopping because they are channel agnostic in that regard.

So are you doing anything different now to make sure that message gets to the consumer when they go into the -- at the point of sale, so when they go into the stores? Or anything you're doing to make sure that the consumer understands that there's multiple products, there's lots of different ways to be within the OLAPLEX ecosystem?

So we have an ability both at retail merchandising as well as online to showcase that the way we look at our performance wheel is treatment, which is our 0 and 3; maintain, which is our shampoo and conditioner; and then protect, which is our No. 6 and No. 7, which is the Bond Smoother and the Bonding Oil. And there's really only 2 SKUs in each of these cohorts, and it gives people the understanding of what SKUs does what. And the data point that I can share with you is that the #1 SKU that is on our own olaplex.com is a virtual bundle that covers all of our retail SKUs. And that means that consumers do listen. When they believe that they can benefit from a brand, buying the full assortment is not a problem. What the problem would be is finding the assortment. And so we always had 0, 3, 4, 5, 6, 7 and 8 separately. But once we put it on a virtual bundle, it became the #1 selling SKU. And it has been the #1 selling SKU since we introduced it in September of 2021.

Okay. And then inflation, it's been a theme throughout the last 2 days here. And maybe for both JuE and Eric, if you could give your perspective on -- given your experience, just -- and this is an unprecedented level of inflation that consumers are seeing. Just how -- what type of choices do consumers make within skin care, hair care, these categories? And again, just given that this is inflation that we haven't seen at this level a long time, just how you're thinking about watching that, monitoring that or things you might have to do to sort of accommodate consumers, I guess, if they're making choices with regards to inflation.

I'll just answer that very quickly, and I'll hand it over to Eric. If you look at where our price point is, we are at entry level prestige hair care. And not even for treatment, but at shampoo and conditioner. So that is really the entry level. We feel very confident that consumers are not -- they are searching not for just value in terms of pricing. They are searching for value in terms of performance. And this is backed up by research that we do. And when -- the research constantly tells us that it's not about the price point, but it's about the performance. And when we do a word cloud, expensive never comes up in our data points. Yes, inflation, we are going to constantly watch it because it does determine how people behave. But because of where we sit in the prestige space in hair care and overall in beauty, we feel very confident that the consumers will gravitate to performance rather to just pricing.

I'll only add that well, every economic moment isn't exactly analogous to another one downturn, not to another -- and maybe some of the things we're seeing right now, we haven't seen for a while. What we can say is the prestige hair care category and beauty in general has proven to be incredibly resilient through economic cycles. You might see someone not go on that vacation, but they're actually going to treat themselves to that beauty product that makes them feel better even during a difficult moment. We quoted the number yesterday. Per NPD, in U.S. retail, prestige hair care grew 47% last year. We expect it to grow double digit this year, even with the economic outlook that we're talking about right now.

Can you talk about how OLAPLEX is going to enter China? Is it going to be through salons or brick-and-mortar stores?

Great question. So we are already on Tmall Global, which is cross-border. And the reason why we did that is because we don't believe in animal testing, but we also believe that it is important to get our message out there to one of the most populous nations in the world and also a fast-growing beauty adopter. And we found that 34% of the consumers actually buy hair care online, whether it's from Tmall, both cross-border as well as in the Mainland China as well as JD.com. And as everybody knows, Tmall is managed by Alibaba. So they are going to spend a lot of time and effort to help brands to kind of get visibility. And because we are on cross-border, we are able to message. We are able to join forces with live streamers, key opinion leaders, work with the Little Red Book and really work with the community to showcase our messaging, our application, why we are important. And they are one of the first country, if not the first country, that really understood skinification of hair. Because when we started talking about that, our first year anniversary for 11/11 took us from a ranking of 30-something to the #1 ranking across classes of trade. And when they translated our skinification of hair, they actually said in Chinese equivalent to, OLAPLEX treats hair like skin. So we believe that we have gained a certain understanding and traction, and our messaging will resonate once the Chinese government make inroads on animal testing and make that less onerous on brands who want to go into the Mainland market.

Can you talk about innovation plans? It's 2 to 3 a year per annum for 3 to 5 years? Is it months -- almost once a quarter? How should we think about it? And I assume it's margin accretive?

Yes. So in terms of our product launches, we look at 2 to 3 launches a year, one of which will be a professional product or it might be a retail product, all 3 products may be retail. But what is important to note is we have the luxury of launching products with partnership with our retailers and our professional distributors because there's only 52 weeks in a year, and they will calendarize time for front of store, window display, high-traffic moments where they will collaborate with a brand that is successful for them to get more visibility. So we look at those calendarization with them, and we will then meter out and plan out launches according to those time lines. But they are not going to be all lumped together, obviously, and we want to cadence it out, but we have a full line of sight in terms of innovation, all the way well beyond 2024.

And I'll just add, because the other part of your question was about margin accretion. Look, the innovations in our funnel are consistent with our strategy and consistent with our disruptive model. So -- and we design from a gross margin perspective to target at least margin neutrality or accretion. Yes, the real thing that we look at, most importantly, is incrementality. So if we see an opportunity, innovation very, very incremental to our business, of course, it's going to be profitable. But you know what? If it's a couple of hundred basis points dilutive but 90% incremental, we'll do that every day because it's incremental profit dollars and tremendous shareholder value creation.

I had a question for you about -- I missed the beginning of your presentation, and I know that K-Beauty is very big, especially for firms like Estée Lauder or L'Oréal, there's been a focus on that. And I don't -- are you -- would you be a good fit for a company like that in terms of their portfolio? Have they been acquisitive?

Sorry. Are you talking about K-Beauty?

Well, I know they -- I was at a presentation with some people, executives from Estée Lauder, and they've been making a lot of acquisitions in the skin care space. And I know in Korea, they said K-Beauty is popular. Now it's become sort of an international thing. And for skin care, people use, like you said, 4 or 5 different products. So I'm just wondering if -- since you're saying that's a trend in hair care as well, is there a possibility of maybe partnering with one of these firms for Europe or international?

So are you -- I gather your question is about skin -- entry into skin care category for OLAPLEX?

No, I was thinking that you -- if OLAPLEX is -- sorry, capturing the trend, this trend to use more products, more hair care products, right? That's a trend in skin care, and you've said that, that's become a trend in hair care as well, that consumers will use more than 1 product. Did I hear that correctly?

Yes.

Yes. With the skinification of hair care.

Skinification. Right.

Yes.

So then would your brand be a good fit, either to partner with an international conglomerate like L'Oréal or Estée Lauder? They've been very acquisitive in the skin care space and very focused on that K-Beauty approach to having many products available to people, consumers.

Yes.

Yes. I think what is important to note is we are leading this category. We are disrupting it. And as I've said, we are shaping it. So we want to continue on that path. And given that the opportunity in hair care is tremendous, we will continue to focus on what we want to deliver to the professionals and our retail customers as demanded by our partners in the business.

I think that might be it from the crowd. I've got a couple more for -- just running the last 2 minutes out. I'm curious about customer acquisition costs. We've been hearing a lot about how online, things are getting a little more expensive. You guys have 3 fairly different channels. I was just wondering, have you seen that kind of the rise of the customer acquisition costs online? And what has changed in DTC and in specialty retail as well?

Yes. So one of the things that worked really well for us is sampling and then acquiring new customers through that sampling program without kind of like speaking our turn. There are a couple of very big retailer houses that have actually told us they have never seen the kind of redemption rate that we have. So we will continue to double-click on that in terms of customer acquisition because that also allows that customer to write a review for us through that sampling program. So it has a dual reasons for doing that. The other thing that we find that our hair diagnostic program is one of the most efficient way of acquiring new customers because people come in, they want some sort of personalization, not necessarily customization. And we are going to be updating our hair diagnostic to 2.0 because when we first did that, for a very nominal investment, we actually were able to acquire 1.3 million unique customers from that space. So with all of that, we will continue to really look at technology-driven and technology-led ways to acquire new customers because that kind of customers are sort of acquired, it's actually more long lasting and more loyal than if you were to give them a special discount or to tell them, "Recommend your friends and family and you get a free product." We find that those are very short lived. You can get a peak, and then they kind of drop off.

Great. I guess maybe one more question because we started a little late, if that's all right. But it's just around -- specifically to specialty retail and Sephora and Ulta separately. Where do you see the in-store placement evolve? How do you see that changing? And so far in the business, how have in-store executions translated to larger basket sizes, customer retention?

Yes. I think when you look at Ulta, it's easy for us to say that, look, we just launched. They gave us a front of store. They are now moving us into permanent installation, and then they're giving us a double facing when it comes to certain programs and activation. And all of you can say, "Sure, you're a new brand. They are giving you a lot of attention." But look at our history with Sephora. 2018, we started with them. And every time when we have a new launch, we get triple facing. We get a front of store and end cap and our own merchandising space. And we even have windows placements. So we feel confident that the way we are being merchandised will be very much determined by our continued success. And I think that given, again, I emphasize, we are leading this category, and we continue to be their #1 brand from the day we started with them. We are now doing the same with Ulta. The owners is on us to continue to deliver the results just as the owners is on us to continue to deliver performance for all of you, and then the journey with us is that much more exciting.

Great. Okay. I want to be mindful of time. We're a little bit over, but I think that should be good. Thank you very much for joining us.

Thank you.

Thank you, guys, for coming. Thanks to everyone online. Appreciate it.

Thank you.

Thank you.

Thank you, Jonathan.