Skechers U.S.A., Inc. (SKX) Earnings Call Transcript & Summary

Good afternoon. This is Kimberly Greenberger, and I'm the branded apparel and footwear and softlines retail analyst here at Morgan Stanley. We're very pleased to host Skechers today. Skechers is a $5 billion market cap branded footwear company with over 3,500 stores worldwide across 170 countries. Skechers' product offering of 3,000-plus styles and 31 brands serving all genders, ages and categories ranks Skechers as the #1 brand for walk, work, casual and casual lifestyle shoes in the U.S. Skechers generated over $5 billion in sales in 2019, nearly 50% of which were international. Today, we're joined by Skechers Chief Financial Officer, John Vandemore. John joined the company in 2017 and direct Skechers' overall financial policies. He's had over 2 decades of business finance experience, having served most recently as EVP and Division CFO of Mattel as well as the CFO and Treasurer of International Game Technology. Prior to that, he spent 12 years in operations and finance roles at The Walt Disney Company, including 5 years as VP and CFO of Walt Disney Imagineering. John, thank you so much for being us -- with us today, and welcome.

Kimberly, thank you for having us. We appreciate it.

Our pleasure. We're going to spend the majority of today's session in a question-and-answer-style fireside chat where we'll explore some of the investor questions that we've gotten most often in recent months. We've also reserved time to answer questions from investors who are signed into the webcast today. [Operator Instructions] Lastly, before we begin, I need to remind everyone that for important disclosures, please see the Morgan Stanley research disclosure website at www.morganstanley.com/researchdisclosures.

And with that, let's kick off the fireside chat with some bigger picture questions on the Skechers' business model strategy and marketplace position. First, John, let's start with thinking about Skechers compared to the other major footwear players that we're all familiar with. How do you think about your position in the footwear market? Who do you view as your biggest competitors? And how is Skechers differentiated?

Well, thank you for that question. Let me start with the last bit of it because I think it informs the first bit of it as well. What we at Skechers constantly focus on is delivering footwear to our consumers that focus on style, quality, comfort and at a reasonable price. And it's really those last 2 that are extraordinarily distinguishable among the Skechers brand. When we talk to consumers, what they appreciate most about Skechers is that we're bringing them comfort on their feet. We're doing so with stylish and quality shoes, but we're delivering comfort at a reasonable price. And we find more and more as people focus on their health, their well-being, that comfort is an important part of that. And it's one of the reasons our brand is so resonant with consumers across the globe because that need, that desire for comfort is everywhere. But equally important is that delivering a value. And I think what really distinguishes Skechers is our focus on bringing comfort and value allows us to play across many different categories of footwear. We deliver everything from sandals and boots in the seasonal area to work product for individuals, everything from first responders to health care workers, to construction, to service industry employees and then all the way on the other end of that, athletic footwear, high-end running solutions, walk, which is a category where we're very well-known for, and then down to kids. But it becomes a solution really reflecting our focus on comfort because all of those categories need comfort. All of those categories appreciate value. And that unique predisposition towards focusing on those characteristics allows us to compete in a marketplace relatively consistently against some of the bigger brands but also against other solutions that consumers might be contemplating like private-label solutions. So I think that also then allows us to compete in a lot of different areas. Many people ask, who's your biggest competitor? And the answer we often give is that there is no one big competitor, there's many different competitors in many different categories. And so we find ourselves able to adapt to changing market conditions well as a result but also find ourselves constantly reading the marketplace and adjusting in response to what a variety of different competitors do in the marketplace. Now certainly, there's areas where we compete at the highest end with some of the best purveyors of running product out there. But at the same time, we're competing against, as I mentioned, private-label footwear in categories like sandals and the like. What we pride ourselves on is our ability to deliver product and marketing that resonates with consumers so that we can compete in each of those areas successfully.

Great. That's excellent. Has COVID changed the competitive landscape in any way, John?

I think in some respects, it has. In other respects, it hasn't. In areas that it's changed things, I think it's honed to everybody's focus on solutions like omnichannel delivery, like e-commerce. It clearly has had an unrelenting effect on retail for some. On the flip side, I think it's been reinforcing of the notion that brands have value and deliver value to consumers. What we find is that, in particular, in this turbulent time, customers are eager to associate with brands they know and they trust. It's a bit of familiarity in an otherwise unfamiliar environment. And we think that's something that resonates with consumers. I think we're going to continue to see operational challenges as a result of the pandemic, even more maybe than we've already seen. But I think brands with a purpose that are delivering on their consumer value proposition are going to continue to lead the way. And we're all going to continue to adapt and adapt well to the current environment so that we can continue to provide that benefit to our consumers.

Great. Fantastic. I wanted to talk about the target customer. And just based on the breadth of different customers that you target, there may be a variety of target customers. But is there a typical Skechers customer? Does that customer vary by geography? And maybe does it vary even within the various lines that you have?

Yes. It's a great question because as much as I would love to distill the Skechers customer down to one psychograph or profile, that's nearly impossible. And part of the reason it's so challenging is what I mentioned previously, we compete in so many different categories, if we only appeal to one consumer, we would never be able to sustain the business that way. In terms of broad brush strokes, again, what I would emphasize is that we're very resonant with consumers who appreciate value for the money, for consumers who are focused on their health and well-being and prize comfort in footwear, which I know is not, unfortunately, everybody's primary focus, but also for the people that they're buying for. When you get into kind of major differences in customers, I think you'd find that on one end, we're providing kids' footwear, which is obviously a much younger and more active demographic, which obviously also then includes mom, who is a target demographic for some of our other categories. But by that same token, when you have strength in providing work footwear, you're really -- you're targeting a lot of different people. Outside of the United States, we do find that there tends to be a slightly younger skew to our demographic. I think that owes in part to how we've grown up in many of those countries and what we've delivered to consumers as well as how they're developing as consumer-led economies. But again, I think our primary focus has to be on those core characteristics because we find that those allow us to extend beyond a core demographic. To be sure, we have people out there who just love our brand. And that's a fantastic base to have. But what we find is it extends concentrically even beyond that because of people who appreciate primarily value or comfort or some of our fashion-oriented product. So it really is a very broad base. But what we know is, again, those 4 characteristics resonate with all of our consumers or the people who buy for them like mothers for kids. In that, it's style, comfort and quality at a reasonable price. And that's what drives our brand.

Makes sense. And it's hard to imagine who doesn't fit into one of those psychographic profiles actually. Skechers, you run the business in such an agile way in terms of adjusting styles, areas of emphasis, inventory levels. It seems like this would have come in handy certainly in a year like this. Can you talk to the audience about the agility that you have built into the model as well as how this agility helps you navigate this year?

Yes. I think it's a very perceptive question, Kimberly in that I know oftentimes, Skechers doesn't look or sound like many of our competitors in the footwear and apparel space. We know we're unique. We're led by our founder, who started this business from scratch. And in many ways, that provides us innumerable opportunities. But most among them is what you just highlighted, our ability to be agile and make very quick decisions when necessary. And I think you've seen that throughout this pandemic. When it first hit, like many other companies, we were looking at a wide array of data points that didn't very clearly belie the road ahead. And so we had to intuit what we thought was going to be the most important levers to pull as a business. And those changed dynamically as the situation evolved. I mean for us, the initial experience we had with the pandemic was China. And that really gave us one model to look at. But as the virus impacted more and more countries and markets globally, we saw that the same situation was unlikely to recur everywhere with equal degrees of speed or decisiveness. And so we had to, literally, as the old saying goes, bob and weave aggressively. But our ability to make quick decisions under intense pressure, I think, really helped us navigate this as good as anyone else. Those extended everything from supply chain management, inventory management to expense management, to liquidity management. The reality is that we still carry with us many very positive characteristics of our entrepreneurial founding. And that helped us. It helped us integrate decision-making among functions. It helped us move quickly. And so I know sometimes it's a unique version of footwear and apparel you're looking at when companies are compared to Skechers. But in this instance, I would tell you, it was extraordinarily valuable because it helped us react quickly, integrate information flow and decision-making quickly and navigate through what we think was a very trying time fairly successfully and while at the same time supporting those that we depend on and who depend on us across the globe, and in particular, in our supply chain. So we couldn't be happier with how we navigated a difficult situation. We certainly didn't do it perfectly. And quite frankly, as we look toward potential future challenges of the like that are occurring now with the surge in cases, we feel much better that we know what to do and we know how to do it and how quickly to do it. And so afforded that experience, we feel good about our ability to react in the future and certainly as situations present themselves.

Fantastic. Okay. That's great. I wanted to look at -- look back at the revenue growth that Skechers have delivered. And it's really impressive here, 17% revenue growth rate over the past 5 years. John, is there an easy way -- and maybe there's not an easy way. But is there a good way or -- for investors to think about the building blocks of getting to that kind of revenue growth over time? What were the key ingredients basically to drive total revenue?

Yes. It's funny. I -- as someone relatively new to the company, 3 years in now, I'm often amazed and was certainly amazed when I first arrived at Skechers, how we had managed to pull off successfully really a trifecta of growth that many larger companies have tried and failed at. We managed to grow our domestic business by expanding our product lines. We managed to grow our direct-to-consumer business by growing our retail footprint. And we managed to grow our international business across the globe. Really being able to pull up all 3 of those simultaneously is amazing. It's amazing for any company. And I think it's a testimony to the strength of our product and marketing, which is really the consistent vein among those 3 growth profiles. Now each was handled differently, and each has different characteristics to look forward to in growth. But it's precisely the recipe we see to continuing to grow the brand. One example is in the area of e-commerce. Historically, as we had grown direct-to-consumer, e-commerce wasn't as important. About 3 years ago, we began to focus very heavily on the need to grow e-commerce. And we've put a lot of effort, both time and money and talent into growing our e-commerce offering, a complete restack of our technology from the back forward, culminating with the launch of a new website and 2 new mobile applications this year, but also including a new point-of-sale system across our retail footprint that better integrates our online and off-line offering, including services like BOPIS and BOPAC. But that same solutioning that has impacted our domestic direct-to-consumer business is going to be extrapolated globally to augment our continuing ability to grow the brand internationally. So I think what you find is our strategy has been founded, first and foremost, as I said, on a keen focus around product and marketing and then taking those channels and growing them individually through a combination of adaptive approaches in different markets, a lot of autonomy for local operators to grow as they saw fit, but also with the complement of the strategies that can be shared among and between those areas of business. And those are all areas that we continue to think will bear fruit in the future. Maybe a different flavor, maybe slightly different foci among them, but those main thrusts will continue, we think, to allow Skechers to grow beyond where we were in '19 at $5 billion to $6 billion and $7 billion and $10 billion and hopefully even beyond that in the future.

Excellent. I wanted to just follow up on your e-commerce point there because you've obviously seen a marked acceleration in your e-commerce business this year with growth of over 100% in both the second and the third quarters. Then you talked about the company sort of starting to target e-commerce about 3 years ago. This year, maybe the events of this year have accelerated some of the strategies. Maybe you would have relaunched your website and your digital platforms even without COVID. But I'm wondering if you can talk about the sort of pivot to a focus to e-commerce that the business seems to have done. And when you think about long-term growth in e-commerce, how should investors think about the long-term opportunity in e-commerce if you think about it globally for Skechers? And what sort of revenue mix do you envision down the road if you think about split between wholesale, direct-to-consumer stores and e-commerce?

Yes. So I think the first comment I would make about that is, we've known for some time, e-commerce had to be a more integral element of how we went to market for consumers. I mean we're consumers too. We all experience the benefits of a well-run, well-integrated digital solutioning for consumers. So that was known. I think somewhat fortuitously, we had made a lot of investments right before the pandemic began. And in fact, we had already planned to relaunch the website that we did in the third quarter well into the middle of 2019 or even earlier. So in some ways, we were benefited by having made a lot of those investments upfront. I think that put us in an excellent position to capitalize as we did on the pandemic-infused growth. And if anything, while it didn't -- it wasn't the reason we chose to get behind e-commerce as forcefully as we have, it was certainly -- if they say it's certainly lit a fire under the organization to continue in that direction and move as quickly as possible. And I think you'll continue to see that. We understand fully the need to offer a compelling and seamless digital/physical solution for our consumers. We're 100% behind that. And we're rushing to get as much of that forward as we possibly can, not just in the United States but also across the globe because we see that as a trend that's going to ultimately engulf the entire world. Now that being said, it isn't something that you just do by relaunching a website. That's not how it works. There's expertise to be developed, strategies to be honed, product to be attuned. And so I would describe us as still very early innings in what can be, we think, a very significant offering online but then one that ultimately complements our physical stores. I mean our end view is that consumers need to have the flexibility to find a solution that makes sense for them. That's what we want and -- when we think about shopping as consumers ourselves. So creating a seamless experience between the physical stores and our online platforms is our main objective. It is a reason why we don't really look at targets. We don't really think that there needs to be a distinction between a digital sale and a sale at retail. We think of those as direct-to-consumer sales. That being said, we know more and more sales are going to originate through a digital mechanism, and we want to make sure we're prepared for that. But what we really want to have happen is that a consumer can't really distinguish a difference between a sale that begins online and then ends with a pickup in-store or starts in-store and ends with a delivery at home. We want to make that a seamless and effortless transaction for them. And we think that's absolutely essential going forward so that we can continue to be at the leading edge of delivering to consumers what they want, which is at the end of the day our product. The one point I'd mention about that is, in footwear, in particular, we feel like there's always going to be a need for physical presence. Many people want to try on shoes before they buy them. In particular, in our stores, that matters a lot because we emphasize comfort so much. So we never actually envision a world where we're entirely digital and we no longer have a physical store. The physical stores for us are very, very important. And I would add, that's even before we found -- we find ways to leverage them further as distribution outlets for customers across markets and geographies because we absolutely believe that's an opportunity long term as well. We will layer into those, and we will continue to grow the business in complement with our physical stores in that way. But what I would say is, if you had asked me before this year began, would I be happy with plus 100% growth in e-commerce, I probably would have been ecstatic. We think the bar is certainly changing every day, and we've shown what we can do in e-commerce, which is tremendously exciting. But this is nowhere near the top of this dilution, in our opinion.

Yes. Excellent. Okay. Well said. John, there's an investor question coming through that relates very closely to what I was about to ask next. So I'll start with my question and continue with the one coming through the webcast. What do you think investors don't understand or appreciate about the story? What's the most understood or undervalued piece in your opinion? And the question coming through the webcast says, John, Skechers trades for roughly 1x sales, while peers like Nike, Crocs and Adidas trade for 5x, 3x and 3x, respectively. Do you understand why there's a valuation discount? And do you have any strategies to try to narrow or close that gap?

Well, I don't think there's a CFO in the world who doesn't feel like his business is undervalued in some way, shape and form. I do think the statistics in this instance are decidedly behind our claim. Listen, I think in order to recognize the value of Skechers, you really have to stand apart from what I think has become very common in the footwear space, which is to look at what the perception of brand value is or to the highest-level advertising support behind leagues or teams. And that's just not where we play. I think the Skechers story that people want to understand is that we are a reliable growth business. We have, as you pointed out, grown at a mid-teens compound annual growth rate. I think it stretches back now almost 7 or 8 years. And we will continue to grow this brand across the globe. We are predominantly outside the United States today, delivering tremendous value for consumers with several markets extraordinarily early stage in their development. I think some of the historic volatility in the shares has discouraged some. The reality is we're going to continue to focus on what we control, which is developing great product, marketing that product, distributing that product and selling that product. And I think if you measure us on those characteristics, you'd find that we perform as well or better than almost every one of those premium multiple brands you mentioned. Now I think the reality is people may not perceive the Skechers brand to be as sexy in some respects as some of those other ones. And I can understand that perception. But I don't think it in any way belies the value that the brand is going to drive across the globe. In terms of what are we doing to ameliorate some of that situation to the extent we can, I think we've done a much better job of communicating with investors and The Street and hopefully even the II-ranked analysts out there like yourselves so that people understand what we're doing and why we're doing it and how we're doing it. We're also -- we're focused on building a lot of infrastructure that while we were busy growing mid-teens compound annual growth, we probably lagged on, areas where we're supplementing things like our reporting externally and internally, some of our capabilities like financial planning and how that gets used to guide the business and to guide Wall Street and analysts. But at the end of the day, I am a firm believer that the only thing you can really focus on are the things you can control directly. And focusing on running a business of growth like ours and delivering growth in both top line and bottom line while ensuring you have a fortress-like balance sheet, I think that's a pretty notable accomplishment. And I think if investors are willing to take a hard look at Skechers, I think they'd be very impressed with what they see both historically and in the future because I think we are an extraordinarily unique brand in the space with tremendous additional runway ahead of us.

Well said. Okay. Fantastic. So now that we've covered the big picture and strategy, John, let's turn to some of the latest trends in your earnings results. Skechers delivered a really impressive revenue snapback in the latest quarter with only a very slight 4% decline in domestic, with domestic wholesale returning to top line growth and international wholesale delivering a nearly flat result year-over-year. Can you walk us through what drove that pretty substantial sequential acceleration in revenue? And what sort of trends have you observed since then? And how have your expectations evolved around holiday this year?

Yes. I mean the first note I'd make is that it's terribly difficult in the current environment to make broad generalizations because they all apply to some jurisdictions and not others and, in large part, owing to how the virus is impacting different markets. What we saw in the third quarter was tremendously encouraging from a long-term view. What we saw is that if a market was normal or as close to normal as you can be in a pandemic, that the consumer came back to the market. And when they came back to the market, they continue to choose Skechers. We think that is absolutely one of the sell-through drivers that impacted our domestic wholesale business growth. It was absolutely one of the factors that helped our direct-to-consumer business get stronger, albeit against some very difficult and challenging metrics and traffic that I think many have spoken about. And so when things reopened, when the markets became stable, you saw the consumer come back. And when they came back, they chose Skechers. And that was very encouraging. The challenge with the quarter was simply that not all markets were back. A lot of markets remained challenged. Some were completely closed for a meaningful portion of the quarter. And so that dented our results. That was a natural headwind. I'll give you an example. Our distributor business in the quarter was down 40% or more, slightly more than that. By the way, that's another area of the business that's going to continue to be challenged in Q4. We've spoken about that. That's a handful of markets that have been under excess duress relative to the pandemic and now have seen a bit of a backup in their inventory because they were closed for longer and more severely than most. We know that will normalize. But in the short term, Q3 and again in Q4, we're going to face a significant headwind coming from that area of our distribution. It's a great business. We love to have it. It's highly profitable at the operating margin line. And so we're certainly not going to walk away from it, but it's going to be a short-term headwind. In other markets where the business has come back, we're starting to see normalizing trends. China is a great example of that. The business is back. It was back in Q3. It got back to growth. And that was, again, a testimony to the brand and the product and the resonance of those with the consumer. So at the end of the day, that was the most encouraging aspect of what we saw in Q3 and I'd say for the most part, what we're continuing to see in Q4 with an acknowledgment that, certainly since we exited Q3, Q4 has gotten more difficult. The United Kingdom has shut its retail doors for a period of -- going on a couple of weeks now. That has an impact. Other markets like the United States are having different levels of consumer restrictions go into place. In California, where we have a significant number of stores, most of our stores are limited to capacity levels at close to 20% of what they're normally able to achieve. So we're continuing to have to work through those limitations that are imposed because of the virus. When those are stripped away, we see the business do very well. But at the moment, those continue to impact our ability to deliver what we would normally want to be delivering, which is continued growth in our brands. So I would say, so far, this quarter, we were pleased with the holiday that just unfolded against, again, modest expectations given the limitations on consumer behavior that have been put in place. We are focused on 2021 because we think that's when we'll really begin to see the market stabilize and as a result, the brand can get back to where it's been previously and return to that upward growth trajectory. But it's not as if all the headwinds have dissipated, particularly in retail, in particular with those distributors that I mentioned.

Yes, makes perfect sense. Okay. And then gross margin, a similar question. We -- third quarter gross margin, obviously, was phenomenal, nice upside surprise. And you are really tightly managing inventory, and you talked about kind of broadly a less promotional environment. How are you thinking about gross margin into the fourth quarter in 2021? And then if you can think about the next several years, medium to long term, what are the big gross margin drivers? And what's the outlook, particularly in light of the mix shift that you're seeing toward direct-to-consumer?

So like you, we were incredibly pleased with Q3 gross margins. And quite frankly, even reaching back to Q2, even during the most severe impacts from the pandemic, gross margins were very stable, which was, we think, an incredibly good sign. It is a reflection, we believe, of the management of our supply chain and inventory levels that we put in place during the pandemic lockdowns in the U.S., and that continues to benefit us. We've also been incredibly encouraged by the general restraint against extreme promotional activity so far this year domestically. I believe a lot of businesses are trying to focus on driving profitable sales and not just driving sales to drive sales for no top line -- only for top line benefit. And so our hope is that, that general environment continues. We're certainly anticipating that and have been pleased with how that translates into our gross margins overall. There are a few instances where we're looking at pressures on inputs going into '21 that are important to be cognizant of, not the least of which is FX rates that have been extraordinarily unfavorable to the U.S. dollar of late, in particular, in manufacturing strongholds like China. We're looking at that. There's also been some pretty known and obvious challenges with transiting goods both outbound and actually in receipt here in the United States and in Europe. And so we're actively dealing with those. All that being said, our intent is generally to stabilize our gross margins within our businesses and then play for the long-term mix shift that will occur as we continue to grow our international business, which carries accretive gross margins, and our direct-to-consumer business, which is also accretive at the gross margin perspective. And part of our longer-term view is that we can continue to accrete our gross margins, not in big chunks, mind you, but bits as we move to greater proportions of international and direct-to-consumer business. So it's important that we balance the picture as we look forward because there's also a lot of unknowns out there. But that's our major area of focus. So far this year, though, we continue to be very happy with how we've managed the gross margin profile of the business and expect to going forward.

Great. Okay. Fantastic. SG&A, as we -- we've obviously seen some expense cuts this year, and you saw some benefits, particularly, I think, during periods of store closures. As we look forward in 2021, what kind of SG&A reductions that you achieved this year might be more lasting in nature? And how are you thinking about operating expenses next year as compared to this year?

Well, we're going to continue to manage G&A in response to the environment. I think it's important to note that G&A serves the business, it doesn't drive the business, right? In the retail environment, we will continue to throttle G&A based on the factors that tend to drive at least the variable G&A elements of that business. So as traffic dictates, we will load labor to respond and to make sure that our stores are well operated but don't have any excess labor burden as it can be avoided. In other areas of the business, it's really a decision made at the operating level, what's the right operational solution for the environment. And that was prevalent in Q3 as what we saw the pullback in some of the retail-sponsored G&A, but in response to that, in response to businesses where they were growing, we had to deploy more G&A dollars. A good example of that is in China, where 3PL services that we rely on to ship goods have to vary with the increase in shipments that we saw in that quarter or for example, in our e-commerce business, where the shipping cost is something new in our retail environment. And so that will drive incremental G&A. So I think what you can expect is we'll continue to manage G&A aggressively, but we don't want it to become the restraint on either returning the business to growth or growing businesses that have the opportunity to do that. And the real opportunity then becomes as the businesses that are still under duress like retail, get back to their old footing, we have the opportunity to leverage. Same thing for our distributor business. As it begins to contribute back to normalized levels, it has the opportunity to provide us operating margin leverage. And then from there, we'll continue to do what's right for the business, which is our primary ethos around G&A, where we look to at least try to bound it by top line growth at one end and what's necessary for the business at the bottom end.

Great. Okay. And then on the last earnings call, you talked about Skechers continuing to invest for growth with the focus on direct-to-consumer capabilities and global distribution infrastructure. Can you elaborate on these key investment areas as well as any sort of near-term or long-term CapEx plans associated with those?

Yes. I mean our primary focus on CapEx has been infrastructure and direct-to-consumer offerings. On the infrastructure side, we know the brand is going to continue to grow globally. We know we needed to add capacity. We started our first distribution center in China. Unfortunately, that's been hamstrung a bit by the pandemic. So whereas that was originally anticipated to open this year, it will open up to full operations next year. And then, quite frankly, very quickly after that, we'll need to think about how we add capacity there because that market will already be beyond its -- the capacity for that single distribution footprint. In other markets, we've had to react. The U.K., we're adopting a U.K. distribution posture that's going to require a distribution center in market now in anticipation of a post-Brexit environment. We've needed to upgrade and we're continuing to upgrade our distribution capacity in Europe. We've opened new distribution capacity in South America. So a lot of focus for us on ensuring that as the brand grows, we have the capital and infrastructure to support the brand so that doesn't become a constraint. On the other side of things, in the direct-to-consumer business, where appropriate, we're investing in stores. We're also, as we mentioned before, investing in e-commerce in a significant way, including point-of-sale and other solutions. So the main focus of where we invest our capital is pretty aligned with our overall strategy, both to continue to grow the brand here and internationally as well as to grow that direct-to-consumer channel. There's some other odds and ends in there and some that involve catching up on latent IT investments or latent investments in processes or systems that we need to run the business. But the vast majority is very squarely aligned with our primary growth strategies.

Oh, I'm sorry about that, John. I was talking to myself. I was on mute there. We've got about 1 minute left in our session today. And I wanted to just ask if there was anything that we didn't talk about that you wanted to make sure that investors heard or if there's a key message you would like to leave our audience with today.

We've mentioned it before. I think what I hope investors understand is we feel incredibly confident in the long-term prospects of the brand. Irrespective of what's transpiring with the pandemic, we're making investments to that end. But we also see tremendous opportunity to continue to grow this brand. In the near term, we're absolutely assured that we'll navigate through this. We have the liquidity to do that. I think we have the management expertise, as we've shown, to do that well. So we'll get through this short-term aberration of a pandemic market. And then our goal is to get as quickly as we can right back to the growth trajectory that we're known for. And in that, we'll continue to support the business and help drive the business in a way that we think will ultimately be conveyed in how the brand is perceived and valued in the marketplace. We're focusing every day on how to grow this brand. And we know that, that growth will yield value for all of our stakeholders, ourselves, our shareholders and the communities in which we operate. And so we couldn't -- we really couldn't be more confident in that long term. And I think, again, we have the expertise to get through this on the short term. So we'll continue to navigate that as well as you've seen us do so far.

Fantastic. Well, we are all looking forward to a normal world on the other side of this. And I want to say thank you so much for taking time today, John. And thanks to the audience for joining us today and for your kind attention. We hope you have a great rest of the conference. And to everyone, a happy and healthy holiday season. Thanks, John.

Thank you.