QVC Group Inc. (QVCAQ) Earnings Call Transcript & Summary

All right. Thank you all for joining us today. For those who don't know me, I'm Jason Haas, and I cover Qurate Retail and Hardlines Retail as well here at Bank of America. And I'm very fortunate to be joined today by David Rawlinson, who's the CEO of Qurate Retail. So David, thank you for being with here -- being with us here today.

Of course.

So maybe just to jump right into some questions. To kick off, I'm curious if you could talk about how customer -- how do you see customer count trending over this year and beyond? And I know that you've had an issue of having -- you added some, call them, like, I guess, low-quality customers that were added during the pandemic. How do you see -- do you feel like you're fully have turned out of those low customers? Or is that still sort of a headwind that you're going to see for the next few quarters?

Yes. I love it. So first of all, I appreciate our limited audience. 2 years from now when we're [indiscernible] success. You will be the only person who have heard the story in-person. So welcome to the privilege view. On customers, first of all, I probably should find a better labeled than low quality customer. What certainly happened is, during the pandemic, we had some of the largest customer growth ever in the company, and we have this really a natural bump. And then what we found was, a lot of those customers were actually customers of our core value proposition, and so they weren't extraordinarily sticky. A lot of them were at home, surfing the Internet, watching TV, but -- and largely, they were e-commerce -- disproportionately e-commerce customers, not customers who came in through our main business model. The way we talk about customers publicly as we talk about the 12-month rolling average. So it takes a while to cycle fully out of those approximately 5 quarters of really dramatic customer growth. Actually, this next quarter will be the last quarter that has any of the big growth pandemic quarters in it. So I actually think you'll start to see -- you won't start to see all of the moderation in the next quarter, but the quarter after that. You'll start to see a more normal trend line with all the pandemic noise out of the 12-month rolling average. And I would say, in terms of what we've seen, so through 2022, we actually saw a moderation in the decline as we went through the year and that continued. We're continuing to see that trend into 2023. Based on everything we're doing, I expect for it to continue to moderate going towards flat as we get through the year 2023.

That's great. And can you talk about how, in particular, your best customers have performed through the past year?

Yes, it's great. So I would say, beginning of 2022 was our most challenged -- and by the way, when I talk about the moderation in decline, that's true for all cohorts, of course. It's true for our best customers, new customers, lapsed customers, reactivated customers. Our best customers have consistently held in better than our other categories of customers. Our retention rates with best customers are still in the 90s. That is a touch lower than we had seen historically. I think there are a number of factors in 2022 that explain that. Our delivery promise was much lower than it historically has been because of the fire at Rocky Mount, the problems we had in our distribution center, plus once in a century supply chain difficulty, which everybody is aware of. We had a real inventory glut and so we over rotated a lot of our products, which turned off a lot of our customers who tune in a lot, and therefore, are more likely to notice when we're constantly showing them the same products. And so what we've seen as we've changed the strategy, brought inventory down, allowing us to bring new fresh merchandise to customers. Our order to delivery time for customers are back now to pre-Rocky Mount fire level. So we're back to our historical levels of performance in terms of delivery. And we think all of those things are contributing to the stabilization of our customer file. We disclose it on a trailing 12 month, but we tend to look at it on a week to week. And we're seeing real levels of increasing stability and our week-to-week number of buying customers every week, and so we're encouraged. Still some work to do, but we're encouraged about some of the improvement we're seeing in terms of customers.

That's great. And can you talk about how the QVC and HSN customer differs? And what you've been doing to serve each of those customers differently?

Yes. So it's interesting. What we've generally said about the HSN and QVC customer, HSN customer, we're targeting a slightly older customer, a slightly higher-income customer. That customer tends to put a real premium on quality, a real premium on host and a real premium on class. The HSN customer slightly, although still higher than the average household income, I'd say slightly less wealthy than QVC customer, slightly more fun and adventurous, slightly more expressive. You might say, slightly louder. And so if you watch the presentations, you will not get confused. You can take all of the branding off of an HSN presentation and a QVC presentation and you will see real differences in how we present the personalities, the pace. HSN is faster, more varies, louder colors, more pronounced. QVC is just real high quality straight down the line. And so we do see them catering to different segments. And then that has a difference in product choice, right? So we're going to really lean into building the jewelry business at HSN this year. We think there's a real opportunity. HSN has typically done more electronics. HSN has been a little bit more celebrity-driven where QVC, our host tend to be our celebrities and people really know our host. They really know what David Venable or a bunch of our other high-profile host. So those are some of the differences. We've gotten sharper over time. So you'll remember one of the first thing I did -- sorry, when I came in was a split QVC and HSN again because we had started to get too confused about the brand identities of each, and we now have separate Presidents and leaders of each business. And I think you're starting to see them refine their natural cadence and tendencies. I think one of the things you'll really see from HSN, as we go this year, is you'll see more celebrity relationships, more celebrities on air and more celebrity partnerships this year.

That's great. So switching topics a little bit. I'm curious if you could talk about how cord-cutting has impacted the business? And what you're doing now to drive greater revenue from streaming?

Yes, that's great. So we're not immune to cord-cutting. We're insulated, I would say, because we tend to have older customers who are not as quick to cut the cord. So we definitely see cord-cutting, but we don't quite see it at the rate of the larger industry, but it's a real thing. I would point out, though, that we are still growing minutes viewed on our linear channel. So yes, we're seeing cord-cutting, but we're also seeing some new viewers, and we're seeing continued viewing -- continued intensity of viewing and growing viewing among our best and most loyal customers. So we're actually still seeing total minute view growth on our linear channels, and so linear for us is not dead. We're still very excited about the linear business. Our streaming business after being relatively flat for a number of years, we got really focused on it last year as a big part of our strategy change, and our streaming business roughly doubled last year both in terms of number of users and in terms of attributed revenue. We think we have the chance to double it again this year. And then at the end of this year, it starts to be -- we haven't put a specific dollar total to it, but I can tell you, at the end of this year, it will be of a size where it starts to be really relevant to the overall company results. So we're really happy with what's happening in streaming, and we're continuing to see good, strong growth in streaming, which is, I think, certifying it as an opportunity that gives us a chance to overcome the headwind that we see in our linear TV business.

Do the economics differ between linear TV and streaming? Is it more expensive to -- is it lower margin to be on streaming? Or does it end up netting out to similar?

It ends up netting it out to similar. So we sell essentially the same merchandise and streaming around the same categories. Similar average sale prices. Similar gross margin profile. So the product sales themselves look pretty similar. The customers look similarly profitable. In some cases, maybe even a touch more profitable. We're watching that as we continue to grow it so fast. I think eventually, you'll see a little bit more differentiation between a streaming customer and our linear customer, but no reason to believe a streaming customer will be dramatically less profitable. And then on the cost side, our streaming costs are actually relatively constrained because we're not -- we're sweating our traditional assets for the content, either repurposing things from our linear channels or we using our content creation assets to create the new program. And we aren't in any of the streaming bidding wars for content. Everything we're doing, we're doing ourselves, and we can do it extraordinarily cheaply because we already have all of this infrastructure in place. And then past content, the final piece is, what do you play for carriage, right? And so -- and I would say, the carriage models versus what it's cost historically over linear, we've not seen them be radically more expensive. How you spend your money might be different. It might be free to get on the platform, but you need to do some audience development rather than paying for channel placement like you used to do in the cable TV universe and that sort of thing. But no reason at this point to think that our streaming business is going to be substantially less profitable than linear has. We may -- it may be -- we may have to invest a little bit to grow it, but today, even as it's growing as quickly as it is, we think it's a profitable contributing business even today, which I think stands pretty uniquely among streaming services. I think most things in the streaming universe today are losing money, and we're not.

Do you have a target for what percentage of the business you'd like to come from streaming? Or is it more just kind of follow where the customer watches you guys?

Yes, it's great. So we'll follow the customer. I expect that as far as the eye can see, streaming will be growing dramatically faster than linear. And so I expect it to constantly be taking share any way you measure it. But if you look at minutes views on streaming versus linear, I think -- I don't want to put a number out, but I think you'll continue to see it take share.

Got it. Switching gears again. Can you talk -- I want to jump on Project Athens. Can you give some examples about some of the initial changes that you've made as part of Project Athens?

Yes, that's awesome. So Project Athens is a massive enterprise for us. We have a transformation office. We have hundreds of initiatives, all with accountable owners. We have hundreds of people around the company working on all of these initiatives. We're meeting and measuring every day. It's a mammoth transformation of the company really from the bottom up, and we're revisiting everything. We are revisiting how we route parcel to our customers because a lot of the cost comes from sending it the wrong route when it comes to paying parcel. We're revisiting how we price on air and what price tiers we use on air. We're revisiting -- we are actually recreating the algorithm that determines how we use our own air assets. I mean one of the most valuable things we have is the time we have on air. And so who do we put on air, which host correlated to which product, correlated to which time of day, correlated to what price points. We're building new muscles around all of those things and looking at how we're remaking the business from that perspective. Obviously, we're also taking a really close look at every aspect of our cost. You would have seen some of the announcements we've made recently about resetting our cost base. And so that's been a part of it as well. So Project Athens is really from the bottom up rethink of every aspect of the business. One more thing I'll talk about that you'll see that's a result of Project Athens, which is one thing I've talked about a little bit publicly is we have under-rewarded our most loyal customers. I think we've said something like for QVC, 17% of customers is 70% of revenue or something like that. We have a very concentrated, very loyal customer base who's often buying 50, 70, 80 times a year. And we've never had a loyalty program for those customers. They've just paid the same price, got the same shipping speed for the same shipping charge as everybody else. And we think there's a lot of opportunity to get closer to those customers. And so we're looking at how do we reward our most loyal customers as part of Project Athens, and we'll be rolling some stuff out there. So we're really excited. I've said before that we see $300 million to $600 million of OIBDA measure of profitability, OIBDA expansion as a result of everything we're doing in Project Athens. And based on everything we're seeing, that's a run rate number. Based on everything we're seeing, we think we're on track to delivering that number.

That's great. So I was going to ask about that number. What's the breakout between how much comes from revenue versus cost savings? And then also, what does the cadence look like? I believe that's a 2-year target. So what's the cadence between 2023 and 2024?

Yes, that's great. So I would say, it's about 2/3, 1/3. 2/3 is either cost or margin expansion and roughly 1/3 is revenue. I would say -- and so it's a program disproportionately about cost and margin and things that are more in our control and things that we think are more highly bankable, and we designed the program that way intentionally for it to be more reliable. And then your -- the second part of your question was?

Just the cadence of how it builds through the years.

Yes, that's great. So we'll see very substantial benefits in 2023, but we will not see the full benefits until 2024. So a little bit of the way it works is, we'll do something like 70% of the work, the execution implementation, and we'll receive something like 30% of the benefit or something like that in 2023. In 2024, we're implementing in 2023, so you're getting -- as we implement, you're getting partial years of the benefit and 2024 will mostly have implemented everything, and then we're going to get a full run rate year of benefit in 2024. So you'll start -- you'll see it start to have a real impact on our results in Q3 and Q4, and then you'll see a full year of real impact in 2024.

Should we expect -- in terms of top line, should we expect the declines to moderate through the first half of the year, and then we'll see more of that stabilization and growth in the second half?

I think that's fair.

Okay. In terms of the target for the next 2 years, so you're putting out the stable revenue and double-digit OIBDA growth. What led you to that -- the right conclusion that, that's the right? Why not grow, maybe sacrifice a little bit of profitability. What like led you to decide that flat or stable revenue and that double-digit OIBDA and free cash flow is the right metrics to go for?

Yes. So frankly, I think we have some credibility doing part to do, and I'll -- and I think it was important to build an achievable plan without wishing for miracles on the topline, given everything that we're doing. And so we built a plan where we didn't need extraordinary growth, especially given the recent performance of the business. We just needed a level of stability. In terms of pushing for growth versus profitability. I think given where the company is right now, one of the questions we have to answer is, is the company going to get back to sustainable levels of free cash flow generation and sustainable levels of profitability just as a practical matter of where we are right now and given our capital structure. So I think we needed to get through this year showing the right levels of free cash flow and profit growth, and that's why when I talk about growth in Project Athens, I talked about double-digit CAGRs on both of those. And then as we go forward and I'd say, the second piece of it is, the things that we're growing, we're starting from a relatively flat but it stands. So streaming had not been growing until this year, and so it takes a while for streaming to grow to be big enough to really move the top line, right? Livestream shopping is something that's relatively new. We're excited about it. We think it's going to grow, but it's going to take a while for it to be big enough to really move the top line and overcome whatever mild headwinds there are from the linear television franchise. And so it's a combination of really focusing on profitability and cash flow this year. And the fact that the things we have that we think are going to be -- really drive growth in the future are just going to take a little time to get of enough size to move the top line.

Got it. And I know last year's results were especially impacted by the fire that you had at your largest DC. So can you just talk about where the supply chain sits today and how it's operating currently?

Yes, great. So we're in a much better place today. We're back to delivery times that we had achieved pre-Rocky Mount fire. And so that's a great credit to the team and a huge success, and we're already seeing that start to make a difference for our customer. Number one driver for customer satisfaction for us is delivery times. And so when they slipped or customers slipped, they're back, and so we should start seeing that be a good stabilizing aspect for our customer. We're also cycling out of the additional expenses. So because Rocky Mount burned down, we had additional storage facilities. We had additional processing facilities. We opened some 3PLs, Rocky Mount, essentially processed all of our returns. So we had to have a make shift return as we've stood up, started to stand up a more regular distribution center now that we are out of emergency operations. some of those costs have started to fall off. We aren't out of all of them, but we're starting to see that will be a tailwind as we go through the year and those costs come off on a comparative basis. I would say, where we still have work to do is, we won't quite get back to the efficiency on sort of what does it cost to move one unit through the distribution network. Rocky Mount was an investment we made in automation to bring that cost down. We're a lot more manual now without Rocky Mount. We will eventually get back to that level of automation and more actually, but that requires some new facilities, some new investments, some new automation, and we aren't there yet. So there's still some efficiency that we haven't recovered from Rocky Mount, but we've gotten out of a lot of the additional cost of Rocky Mount. We've gotten out of the degradation to delivery times that was a result of Rocky Mount. Final piece I'll say is, Rocky Mount also complicated along with the supply chain crisis in some of our own buying, also complicated our inventory situation which we really had a pretty big job to work our way out of. And I felt good about being able to announce at the end of last year that we had very substantial declines in inventory, which we think will give us a working capital benefit going into 2023, but also helps us do things like bring in new fresh merchandise that are attractive to our customers.

Do you feel like your inventory situation is in a back-to-normal standpoint today? I'm curious if we're behind a lot of the clearance that you've had to do. And just broadly, how you're thinking about using more promotions to drive the top line?

Yes. So I'd say, we are -- we feel good now about our inventory level, having brought it down very substantially over the course of last year. And I was happy that we overachieved. I think we had said, we were going to bring inventory down 20% to 30% in the next 18 months. I did -- I think we did it in 6. We had to take a lot of pain to do that, but I think we overachieved when it came to bringing the inventory down. And what that's allowed us to do is to get clean. So we're very happy with our inventory ages now. We're very happy with our inventory freshness, and we're also very happy with our ability to be able to bring in fresh merchandise as we see opportunities because we have a little bit of space to bring it in now, which is important. So we're going to continue to manage inventory very closely. We put in a whole new set of ways that we manage our buying process and demand processes. That's also something we've worked on. It's a more technical aspect of Project Athens, but we think we're now at a pretty healthy inventory level. You may see a little bit of downward pressure on that number, but we're through the most dramatic piece, and we feel very good about our inventory position now.

That's great. And then just going back to the supply chain for a little bit. Can you just talk about what the end vision is? Are you going to have more -- do you need to stand up more like regional facilities to process the inventory? What eventually gets you that like efficiency unlock?

Yes. So we are today over indexed to the east and to the -- and specifically to the Southeast. We are under-indexed in the middle of the country and on the West Coast. That's giving us longer to deliver times and more expensive parcel rates than we should have, and we are too manual and not automated enough. So I think what you'll see is us establishing more nodes, more in the Midwest than on the West Coast and closer to the centers of where our customers are distributed across the country.

Got it. Can you talk about some of the key hires that you've made recently? And do you feel like you have the right team in place now to execute on Project Athens?

Yes. So we've done a fair amount of hiring, a fair amount of changing of both the executive structure and the executive team. I've been really blown away by some of the talent we've been able to bring in. Stacy as the new Chief Merchandiser at Q, Soumya as the new Head of Streaming, who is Head of Amazon Prime Video Channels, Linda who's our new Chief Resources Officer. And of course, Bill Wafford, who's starts on the 20th. He will be our new CFO and has been a multiple time retail public company CFO brings just a ton of great experience, and I think it's going to really be a huge help as my right hand in the company. So I do, I feel like we now have in-house. Terry Boyle, who's running Zulily, who's about his experience in the flash sales space as anybody. And so I feel like we do have the talent we need to deliver on Project Athens now, and I'm really excited about the team.

That's great. And then you mentioned you had a new merchant come in. I'm curious about are there any categories in particular that you plan to lean into more or any changes to expect in that regard?

Yes. So we have a pretty aggressive agenda across both Q and H. I think you're going to see us lean more into fashion. You're going to see us lean more into Adaptive. We just announced -- I think it was last week that we're going to be working with Selma Blair, who's going to help lead some of our Adaptive work. And we're thrilled with our partnership with her, and she's going to be helping us with some private label. So you're going to see us lean in the private label, lean into Adaptive. We're going to lean into jewelry, especially at HSN. We think that's a huge opportunity. You're going to see us lean into wellness. I think we'll take a more tempered view of electronics. It will always be in our mix and be important, but I think we'll be a little bit more tempered there. I think we also continue to see an opportunity in culinary, and so we have a pretty exciting lineup there as well. So those are some of the places.

That's great. And then I was going to ask about cost cutting actions. You touched on a little bit earlier. I'm curious if there's anything else worth calling out there? And just in general, your philosophy on balancing investments that you're making with also preserving free cash flow?

Yes. So we are designing -- the way we're running the business, the program we own is a path to show sustainable levels of free cash flow generation, given the investment needs we have in the business, and frankly, given our capital structure and our leverage. And so that's a huge first priority for us, and we have to get that right as a practical matter. We also have to rightsize our cost base, right? We've -- the business is contracted over the last period, and so the cost base has to be right suited for that. There are also just some places where we had cost where we didn't need it as we saw where we were going to be evolving the business model. So it was important to gain efficiency where we could. I think, over time, this will be a less capital-intense, less fixed cost intensive business. And I think that's going to free up both the capital we need to establish a much richer free cash flow generation, and it will allow us to make the necessary investments we need in livestream shopping and in streaming that are going to drive the growth of the business.

That's great. Jumping to another topic. Can you just talk about your international business and how that's performing compared to the domestic one?

Yes, it's good. So historically, the international business has been one of our most consistent growers. They fared a little bit less -- they fared a little bit better than the U.S. video commerce businesses have over the last year or 2, but they were impacted as well. I think what we've seen so far is, I've talked about moderation and the customer file moderation in the decline in the U.S. If anything, we're seeing that on an even slightly more accelerated basis in the international businesses. Japan continues to be extremely strong as it has been consistently. And then in the U.K. and Germany, I would say, early signs are encouraging that we're going to continue to see moderation in the decline there. And we're optimistic that we can in the medium term return those businesses back to really stable, predictable growth businesses. And so we continue to be excited, and I think, historically, international has performed a little bit better. And I think we're on a path where international can continue to be a bit of a standout in the portfolio.

What changes have you seen in the competitive environment, both in terms of like livestream shopping, but also just retail broadly?

Yes, good question. On livestream shopping, I think is still the wild, wild west. It's a crazy world. There are a bunch of startups. There are a bunch of legacy players that are trying to play in it. There are now some infrastructure companies trying to build the infrastructure to help everybody else who wants to get into livestreaming. I spend a lot of time trying to understand the universe and the players, everything from the entrepreneurs to the big players. Look, I think it's going to grow. I think it's going to be depending on the reports you look at is $10 billion to $20 billion now. It will be $30 billion to $40 billion in a couple of years. So it's a massive opportunity for us. It is a straightforward application and new medium of what we've always done and nobody else has mastered. We are the best video sellers on the planet. We grew up in the linear TV native format. This is essentially the same format. Every time I'm sure you read some of the articles, any time somebody announces a new livestream effort, they always say, they're QVC for the next generation. So we're pretty determined to be QVC for the next generation. Your other piece was on the broader retail format. I think what we see -- even as we're becoming less promotional because we cleared out a lot of the heavy promotions in the fourth quarter. So we're still promotional, but in a much more disciplined way than we were coming out of the fourth quarter. I think what you see in the broader industry is still a relatively higher level of promotions across retail, at least in the categories that we look at. I think a lot of retailers have made some good success in getting inventories down, but I don't think most of them are quite as clean as we are. And so I think we're continuing to see a pretty high level of promotion. We're trying not to lean into that too much. I think we'll be less promotional than some of our competitors. I think we're trying to lean back now into differentiation, unique products with a unique selling value proposition and with entertainment at the heart of that. And so -- and we're trying to slowly rebuild our average selling price that's ticked down a little bit over time. And so we're probably heading in a slightly different direction than retail overall. I'd also say, it depends a lot on the category. You look at, I think, things like home furnishings, I think, are very promotional right now. I think you used to have to wait 6, 9 months and then all the ships came in. So now everybody is like, what do we do with all this stuff in the time. So fashion, apparel still looks reasonably promotional. I'd say, electronics a little bit less so. So it's pretty varied. But I think we'll be a little bit less promotional than the retail industry seems to be at large right now.

Got it. So we're somewhat nearing the end of time. So if anyone has a question from the audience -- I think we have mics. I see a few hands raised.

So just looking at the capital structure a little bit. I know you talked about focusing on free cash flow and profitability, but can you talk a little bit about some of what are the options you have to raise additional liquidity to pay down the 2024 debt maturity that's coming up?

Yes. So the first option we have to raise additional liquidity is greater organic free cash flow generation from the business. And so that's what I'm working on every day, and I think you'll see that. You will see some of the moves we've made on the balance sheet to make sure we have a lot of options in terms of where we already have cash. We talk about maintaining substantial liquidity under the revolver, and of course, we also have a number of assets that we can look at. So we have a number of places we could go if we need excess liquidity. The first place we're going to go is organic free cash flow from the business, and I think you're going to see a pretty substantial change there, which is what we're concentrating on every day.

And you mentioned that you're taking a more tempered view of electronics as a category. Is that based on where you're seeing demand or the competitive landscape or margins? Like what's the rationale for getting less involved in electronics versus other categories?

Yes. Electronics will always be in our mix, and we know a lot about how electronics work in our business. It's a little bit seasonal. It's huge in the fourth quarter. It's a little less relevant in the first quarter. It depends a lot on the innovation cycle. And so I'd say, the innovation cycle in electronics has been a little bit slower. It's hard to push on electronics if you don't have new stuff. Margins in electronics tend to be a little bit more narrow. It tends to be a little more price sensitive. It tends to be a little bit harder to get something truly differentiated. That's not from the big brands, and therefore, easily price comparable. So as we think about creating really unique emotional experiences with really differentiated products, I think it means you have to play in electronics in a more intentional way, and so that's what we're going to do. We're not leaving electronics. We're still going to sell an awful lot of electronics, I think, but that's not going to be what we try to drive the business with.

So I know you've been disclosing like the customer account information for a while now. And I know you mentioned in previous calls that like the different trends you've been seeing with like the new customers you gained and then some pullback and then just like improvement and everything. So the improvement you're seeing like week by week, what do you think that's -- like what are the drivers for that? Because I know you said like your delivery times are getting pretty close back to normal, and it looks like your in-stock is like a lot better than it was before. So from the week-by-week trends you're seeing, can you speak to what are the drivers that are specifically driving that, do you think? Or it's just a continuation of just like everything is getting better, like a little bit a little. Can you just speak to that a little more?

Yes. It sounds like you have a pretty good grasp on and maybe you can answer some of them. I think delivery times are a big deal. Freshness is a huge deal. So we were in the bad inventory position last year. We had to clear a lot of inventory. That means if I got to show you Pathwater on TV as many times as I got to show you to sell all of my Pathwater. At some point, you're not going to want to tune in to see us talk about Pathwater for the fourth time in a row, and so you just drop off as a customer. Part of what our customers enjoy from us is a lot of variety, a lot of freshness, a lot of new, a lot of entertainment and needing the clear inventory and over-rotating product stands in the face of that. And so I think we were less engaging for our customers, and then there were also a lot of things. When I first started in this job, I just talked about like we just got to execute the core value proposition better. That was the second pillar in Project Athens, and so what does that mean? It can mean things like not only not over-rotating product, but having Today's Special Value that sell out so that to have a reason to come. We had stopped selling out of Today's Special Value because we were ordering too much. It means we used to have a habit of all guests wear in the studio. And then the pandemic came and we started having people Skype in. And so you didn't have the same energy and relationship in the studio when they were selling. So getting guests back in the studio. We had our first live in studio audience a couple of weeks ago and that program outperformed. I think you could sense the energy that was in the room coming through the TV. It also means right product, right time, right? So one of the other problems with Rocky Mount, which like devastated our beauty assortment. There are specific times in the calendar where we know beauty demand goes up. And if you don't have beauty on air, you just missed that buying occasion. So you need to have the right product at the right time for the right buying occasion. And I think we've let the customer down some as we've done that. And then the other aspects I talked about loyalty. We have to get loyalty right. We have to reward our best customer. And then we have to get the cadence of communications, right? And we have to find customers everywhere they are. So we're doing all of those things. It's having an impact. We can see it and the customer file was sort of pulling all the levers at once, but it's going to take some time. We got to win back a lot of customers that -- some customers that we lost. And then we have to, as we get more confident in our model again, introduce it to some new customers as well. And so that's what we're doing.

That's great. So I think we're out of time now. So thank you again for being here. It's great to chat with you. Thank you.

Always happy to be here. Thank you, Jason.

Thanks.