The Warehouse Group Limited (WHS) Earnings Call Transcript & Summary

Thank you all for standing by and welcome to The Warehouse Group Limited FY '22 Interim Results. [Operator Instructions] I'd now like to hand the conference over to your Chair, Joan Withers. Please go ahead.

[Foreign Language] and good morning. Welcome to The Warehouse Group financial year '22 interim results for the 6 months ending 30th of January 2022. My name is Joan Withers, and I'm Chair of the Board of The Warehouse Group. With me on the call today is The Warehouse Group Chief Executive Officer, Nick Grayston; and our Chief Financial Officer, Jonathan Oram.

Good morning.

Good morning.

Now I'm going to start by making some introductory comments and go through some of the highlights of the result, but then I'll hand over to Nick and Jonathan to go through the detail. So firstly, I have to say the half year in review was a difficult trading period for the company. We have once again experienced a period of disruption and turbulence as a result of COVID-19 and the associated lockdowns, starting with the Delta strain in August and continuing with the outbreak of Omicron in New Zealand from January. And that, of course, continues to cause disruption and uncertainty for many people and industries. Auckland was in Level 3 and Level 4 lockdown for a total of 84 days, meaning our stores were closed during this time, with the rest of New Zealand moving in and out of Level 3 and 4. So New Zealand continued to change between lockdown levels until the move to the traffic light system on the second of December. As a result of these lockdown measures, our Auckland stores across the group were closed for 46% of our normal trading days. And across New Zealand, our stores were closed for 23% of our normal trading days during that FY '22 half year. There has been disruption to our supply chain and increased ocean freight costs, which have had some impact on sales and gross profit margin. There has also been a cost imposed in making sure our team was safe in the context of the pandemic, providing greater remuneration equity, and in increasing our marketing investment in TheMarket.com. Despite this, our sales and margins have held up relatively well. However, each of our brands experienced a decline in operating margin percentage compared to the FY '21 half year, and all except Torpedo7 had lower revenues than the previous corresponding period. The charts in the presentation show that taking out the aberration of the COVID-19-impacted period, our trajectory versus the FY '20 half year has been positive. So this result really is a testament to our people, our agile way of working, the benefits of our ecosystem and the resilience of our supply chain, which enables us to continue to serve our customers and deliver their wants and needs. Across our stores, distribution centers and support offices, our people have gone above and beyond to ensure that we can continue to serve our customers and fulfill our purpose of helping Kiwis live better every day. Our agile way of working means we are able to pivot and shift to changes in customer demands and shopping habits and to move our people around to where they are needed most. We are growing our customer-centric ecosystem to provide more frictionless shopping experiences and create greater customer value. Our mix of store footprint and market-leading digital assets enables us to serve customers in this changing market. And the group's robust shipping and stock management processes and controls have managed inventory levels while ensuring availability of key continuity and seasonal lines for customers. So now we'll go to Slide 6 for the key headlines in the first half of the financial year interim results. And as I said, due to the amount of days our stores were required to close during the period, we have seen a decrease in sales compared to the record result we delivered last year. Online sales again increased this year as New Zealanders once again lived, worked and learned from home. However, this did not fully replace the loss of in-store sales. Total sales for the half year were $1.7 billion. This was down 4.3% on the FY '21 half year, but pleasingly up 2.8% on pre-COVID levels of the FY '20 half year. As expected, given the large proportion of the period in which our stores were closed, we saw a significant increase in the proportion of sales our customers purchased online. Online sales came in at $335.9 million in the half year alone, which is an increase of 67.8% on the FY '21 half year and making -- it now makes up 19.4% of total group sales. This is an increase from 11.5% of sales in the 2021 financial year and up from 11.1% in the corresponding FY '21 half year. When the country moved to Level 3, customers were once again able to collect their online orders via Click & Collect. Click & Collect sales were $151.8 million in the half year, up 79.1% on the FY '21 half year and making up 50.1% of total online sales. Jonathan will go into more detailed analysis of the results shortly, but I would like to highlight now that while the first quarter was particularly impacted by COVID-19 lockdowns, we have reported record summer trading sales with growth in the second quarter of 2.8% compared to the FY '21 second quarter and sales growth of 11.2% compared to the pre-COVID FY '20 second quarter. Our gross profit for the half year in review was $599.6 million. That's down 8.5% on the FY '21 half year, impacted by the mix of category sales, the increase in online versus in-store, increased freight costs and the release of inventory provisioning in the previous corresponding period. Again, this was an improvement on pre-COVID levels and represents 5.9% increase compared to the FY '20 half year. Our gross profit margin was 34.7% in the half year, down from 36.2% in the FY '21 half year but up 110 basis points from 33.6% in the FY '20 half year. Gross profit margins were above pre-COVID levels despite the increased supply chain and freight expenses. Reported net profit after tax was $50.4 million in the half, down 8.2% from $55 million last year but up significantly from the $29.9 million in the FY '20 half year. In FY '21 first half, reported NPAT included the repayment of the COVID-19 wage subsidy, and that was repaid in December 2020. Adjusted net profit after tax was $48 million compared to $111 million in FY '21 first half, impacted by gross profit margin and increased employee expenses and the additional cost of doing business under COVID-19 health and safety guidelines. Cash on hand remained strong and at balance date was $150 million, boosted by rigorous working capital management, maintaining appropriate levels of inventory, receivables and payables. The strong cash balance, combined with our undrawn available bank facilities, provided total liquidity at the half year-end of $480 million. Now to Slide 7, dividends. The Board is pleased to announce an FY '22 interim dividend of $0.10 per share. The record date for the dividend will be the 6th of April 2022, and it will be paid on the 26th of April 2022. This represents a payout ratio of 72.2% of the FY '22 half year adjusted net profit after tax and is in line with our dividend policy. The interim dividend will be fully imputed. Now to Slide 8, sustainability. And we do continue to apply dedicated focus and resource to our sustainability journey. And during the half year, we made even further progress. Last year, we established a Board-level Environmental and Social Sustainability Committee to govern the company's environmental, social and sustainability responsibilities. During the half year, we carried over 17,500 unique products with a sustainable feature, and that's up from 11,500 at the end of the last financial year. So this accounts for over $294 million worth of annual sales, and we recorded $111 million worth of sales from those products in this half year that we're reporting on. We diverted 75.8% of operational waste from landfill in the half year and reduced our Scope 2 emissions by a further 2.8% in the half year. We raised a further $1.3 million for New Zealand charities and communities, including over $111,000 in support of Tonga after the devastating volcanic eruption in January of this year. As a further commitment to our sustainability goals, we have also refinanced $140 million worth of our bank facilities with Westpac and ANZ into sustainability-linked loans under which we have 6 clear sustainability performance targets to meet by 2025. I'm now going to hand you over to our Group Chief Executive Officer, Nick Grayston, who's going to update you on the group's performance and strategy.

Thanks, Joan. Moving to Slide 10. In FY '22, we continued to embed agile principles into the way we work. Agile is not an easy journey, and I want to give credit to all our people for having the bravery and stamina to meet the challenge. I want to thank our team members for their patience, their understanding and their resilience during this uncertain time as we continue to tackle COVID-19 together. Our team members have adapted quickly to an ever-changing environment and continue to be there for our customers, which is truly inspiring. As we continue to watch the COVID-19 situation unfold in [indiscernible], it became clear that we would have to adapt rapidly in order to operate safely. We made ongoing assessments of the risks to our people and customers and adopted a variety of measures to keep our team members and customers safe, we increased staff levels to ensure that people could take time off when they needed to, we increased distancing in our distribution and fulfillment centers and we undertook full health and safety assessments with external independent support. We introduced a mandate to ensure all team members were fully vaccinated against COVID-19 in order to perform their roles safely, which came into effect from the 16th of January 2022. As part of supporting our people to get vaccinated, we provided 2,500 vaccines to our stores, DCs and our sales support office. Additionally, we paid vaccinated team members $100 each under a vaccine incentive scheme. Implementing these measures in the half year did come with increased costs, but we made the choice to prioritize the health and well-being of our people. The group also began rapid antigen testing for COVID-19 in November 2021. And this continues across our distribution centers since they are critical to the continued operation of our business. In other people support initiatives, we facilitated 3,635 hours of training and development through Udemy for Business in the half year. It's pleasing to see our people embracing our offer of online learning and development, including those in our stores and DCs as well as many of our staff who are currently working from home. We recognize the importance of supporting our people as they start a family, and we're thrilled to announce that from the 1st of January 2022, all permanent team members are eligible for 26 weeks fully paid parental leave. During the half year, a remuneration review was conducted that saw us realign salaries to market competitive rates across core roles. And we are pleased to report that the gender pay gap at a group level is now 0 with 100% gender pay equity. Across our store network, we are proud of our commitment to pay strong wages, entitling the majority of our team to be paid at least $22.75 an hour compared to the New Zealand minimum wage of $20. This will increase further to $23.58 in August 2022 compared to the New Zealand minimum wage of $21.20 from 1st of April 2022 and will include additional compensation for team members who are fully trained across store functions and have been with us for at least 5 years. Slide 11 shows our purpose and strategic priorities. These remain substantially unchanged in our quest to help Kiwis live better every day and to build New Zealand's most sustainable, convenient and customer-first ecosystem. To build a customer ecosystem means to engage with new and existing customers by solving their needs and wants by offering a seamless and frictionless customer experience. This year, we launched the MarketClub in The Warehouse and on TheMarket.com, our first step towards developing a group-wide loyalty program. We integrated 1-day with TheMarket.com. This combined online marketplace is on track to deliver gross transaction value in excess of $100 million for 2022 financial year. We will provide an update on this at the full year result. We improved our product lines even further while achieving average SKU reduction of 12% across The Warehouse and Warehouse Stationery. We continue to be focused on improving our customers' online and mobile app experience and are proud to have achieved the #1 most downloaded mobile app position frequently during the half year. To build the future experience for our customers means meeting and exceeding their changing expectations, optimizing our store footprint and developing our supply chain further. This year, we saw additional improvements in our customer NPS, up another 3.7 points year-on-year. Our online sales channel continues to grow with group online sales increasing 67.8% in the half and Click & Collect sales increasing another 79.1%. We continue our store optimization program and closed the half year with 253 stores across the network and opened 2 new Warehouse Stationery SWAS stores, bringing the total to 27. Lastly, we continue to invest in our infrastructure in order to excel in retail fundamentals. Our investments in core systems will ensure long-term financial security and operational stability and provide a stronger platform to serve our customers. This year, we have made significant progress in developing our three core systems: WMS, or Warehouse Management System, our new enterprise resource planning system for finance and inventory and our Master Data Management system. Due to strong cash flow management and working capital initiatives, we ended the half year with a strong cash position of $150 million, which, combined with undrawn banking facilities of $330 million, provides total liquidity of $480 million. Our customer-centric ecosystem is designed to solve customer problems and provide a frictionless shopping experience, in turn creating greater customer value. We have strong foundations in place with an established physical footprint and market-leading digital capabilities. In the last 6 months, we have confirmed the rollout of a unified loyalty program across the group as MarketClub, which I'll touch on in more detail shortly. In August 2021, we announced a cornerstone strategic investment in Zoom Health. We have a shared vision to offer convenient and affordable access to health care to all Kiwis. We will continue to drive further improvements to make customer shopping journeys across all of our brands faster, easier and more personalized through unified data, platforms and people while remaining focused on the fundamentals of delivering exceptional value and new assortments with improved customer fulfillment and payment options, both in-store and online. I'm really excited about our new group loyalty program, MarketClub. We launched MarketClub in The Warehouse and on TheMarket.com in October 2021. And this will eventually be rolled out group-wide across all brands. The MarketClub is the first step towards a consolidated group-wide customer loyalty program that is both rewarding and frictionless, providing unmatched value for customers. Our research and experience show us that MarketClub members are more engaged with higher spend, higher frequency and higher average order value behaviors than nonmembers. Customers are telling us that they love the new program with members showing higher in-store and Net Promoter Scores than nonmembers. Investments are underway into systems and back-end tools to support future customer features and benefits as well as supporting the unified expansion of the program across the group's full portfolio of brands. TheMarket.com was launched nearly 3 years ago and is becoming New Zealand's fastest-growing e-commerce platform. The platform now has 497,000 active customers, up from 218,000 just 6 months ago. It is becoming a go-to online channel for our customers, and in the last 12 months, 22% of New Zealand online shoppers made a transaction on TheMarket.com. We have key metrics with which we monitor the performance of the market, and the platform continues to deliver growth on all of these metrics. Now with more than 6,200 brands and more than 3 million products, companies and brands are seeing the benefits of the size of its audience and platform. Additionally, customers are seeing the benefits of choice as they shop on TheMarket.com with 30 million online sessions, spending 19.7% more per transaction compared to FY '21 H1. In the first half of this year, TheMarket.com third-party gross transaction value increased 176% compared to the same period last year. TheMarket.com is on track to deliver in excess of $100 million in gross transaction value for the FY '22 financial year, and we will update you on this at the full year results. And last but not least, I would like to highlight the performance of Torpedo7. Despite disruption, our iconic active and outdoor brand continues its growth trajectory and sales momentum with sales growth of 14.9%, bucking the trend of retail performance both in New Zealand and Australia. In addition to a full complement of brands on offer, Torpedo7's own home brand is expanding and selling extremely well. This now constitutes 36% of total sales with a growth strategy to deliver 50% of sales by FY '24. Operational improvements continue. We have a new end-to-end systems implementation going live in 2023, which will replatform the business and provide further improvements. We have invested in infrastructure and operational improvements to give Torpedo7 the ability to grow and deliver at scale. In the medium term, we expect to see 20% to 30% increase in the number of stores, which is subject to location availability, of course. I'll now hand you over to Jonathan Oram, Chief Financial Officer, who will take you through our group financial results.

Thanks, Nick. So as Joan stated at the beginning, the first half has delivered a record Q2 result, but overall, a sales decline of 4.3% due to the impact of lockdowns, which saw the group lose 23% of trading days. Despite this, half year sales were up 2.8% on FY '20. The drop in sales was largely driven by the sales in The Warehouse, which were down 7.4% or $72 million. And our second largest brand, Noel Leeming performed relatively well, down only 1.8%, while Torpedo7 had double-digit growth of 14.9%. Gross profit margin was down 150 basis points to 34.7%, being impacted by the increased cost of freight, change in trading brand sales contribution and product mix and a higher proportion of online sales. Consequently, gross profit was down 8.5% or $56 million to $600 million. Cost of doing business increased 6.3% or $32 million to $534.1 million, giving an operating profit for the half of $65.5 million and adjusted net profit after tax of $48 million, which was down 56.7% on last year, but reported net profit after tax of $50.4 million was down 8.2% on last year. We are pleased to report no unusual items for the first half versus the first half last year, which included repayment of a wage subsidy and restructuring costs totaling $56.8 million after tax. And finally, operating cash flow was very strong, up 46.8% to $161.5 million. Turning to Slide 18, shows our quarterly sales trend and the strength of Q2 following a sales decline of 14.6% in Q1. In particular, you can see the impact of the lockdowns on The Warehouse and Warehouse Stationery, which were down 21.4% and 22%, respectively in Q1. As just noted, sales in Q2 was our best ever as a group, in particular underpinned by growth in The Warehouse and Noel Leeming, which were lapping record sales in FY '20, and Torpedo7, which delivered a 24% increase in Q2. Turning to Slide 19, we give some further detail on gross profit margin. Most of the decline has come in the group's largest brand, The Warehouse, which contributes 60% of gross profit, with a gross profit margin decline of 220 basis points. Noel Leeming contributes 22% of gross profit and has managed to maintain gross profit margin relatively flat to last year. There are four main drivers in the reduction of gross profit margin at a group level. First, an increase in ocean freight costs and an increase in online sales and freight costs associated with online fulfillment. Secondly, brand and product mix with lower-margin brands in Noel Leeming and Torpedo7 representing a greater share of gross profit dollars. Thirdly, online sales generally having a lower-margin mix of product. And fourthly, inventory provision releases in H1 FY '21, which followed a very disruptive year in FY '20 with the initial outbreak of COVID. Overall, we believe we are still on track with the margin management and improvement initiatives. Slide 20 gives some further detail on our cost of doing business. The numbers supporting this breakdown can be found in our half year financial statements. The bridge shows cost of doing business as a percentage of sales and areas of biggest increase being employee expense and other. Employee expense in our stores, distribution and fulfillment centers have increased over the half with a net impact of circa $11 million. Approximately 1/3 of this has been due to increases in staff pay and the other 2/3 due to COVID-related staffing requirements and operating restrictions such as door greeters, extra staff for Click & Collect and space requirements in our DC. Secondly, in terms of other costs, which excludes lease expense, these have increased by $19.5 million. $3 million of this is due to COVID-related nonlabor costs such as vaccine incentive, rapid testing and compliance. The remainder is evenly split between extra investment in the market, advertising spend, in particular online, and an increase in investment in IS capability and software costs. Slide 21 details our summary balance sheet. The group finished the half in a negative working capital position with an increased level of inventory offset by increased payables balance. Inventory included a higher level of goods in transit, $100 million versus $73 million last year, due to the early -- earlier timing of Chinese New Year this year and reduced stock provisions of $8 million. Net of these movements, inventory is at a similar level as last year and group stock turn has improved from 4.9x to 5.1x. There's more detail on this in the appendix, Slide 36. The increased payables at half year are largely due to timing and are expected to normalize by year-end. Fixed assets increased due to our continued investment particularly in core systems and digital infrastructure. The investment of $4.2 million relates to the acquisition of a 26% interest in ZOOM Health Ltd. in August 2021, which was post our 2021 balance date. Lastly, net cash remained strong at $150 million, along with undrawn available banking facilities of $330 million provides group total liquidity of $480 million. Slide 22 shows our summary cash flow statement. A few things to note here are, first of all, lower EBITDA was offset by not having restructuring costs and the repayment of wage subsidy, which occurred last year, and the positive movement in working capital. These 3 elements account for $138 million of improvement in our operating cash flow. And we ended the half with $161.5 million of operating cash flow versus $110 million last year. We have touched on CapEx and the purchase of minority stake in ZOOM, which you can see is the other main movement from last year. But thirdly, dividend payments is the other major movement with the final dividend payment for FY '21 of $0.175 paid in this half versus no final dividend paid in last year's half in relation to the FY '20 year. Slide 23 provides some detail on capital expenditure. We continue to see a higher run rate of CapEx with spend of $57.4 million compared to $40 million in FY '21 half year, up 44%. The group's major investments included continued development of core systems, including the Warehouse Management System, Master Data Management and ERP finance and inventory systems. Store renewals included the refurbishment of some existing stores, including The Warehouse Porirua and Petone and two new SWAS integrations in Invercargill and Upper Hutt and the new Torpedo7 store in Invercargill. We expect capital expenditure for the full year FY '22 to be close to $135 million, in line with the top end of guidance given with our FY '21 result. This level of CapEx is underpinning our transformation. Slide 25 gives a snapshot of our divisional performance. As touched on before, The Warehouse and Warehouse Stationery were most impacted by the lockdown. In terms of contribution to operating profit, The Warehouse and Noel Leeming account for 86% of operating profit before TheMarket and corporate costs. TheMarket operating profit loss of $12 million is in line with expectations and up from $9.2 million last year. Slide 26 takes a closer look at The Warehouse. Sales in FY '22 H1 were down 7.4% against the prior period due to COVID-19 lockdowns. Auckland stores were most impacted as they were unable to trade for 84 days. However, within that, we did see sales up 1.6% versus last year in our most important quarter, Q2. Gross profit decreased 220 basis points. Ocean freight and freight to store account for about half of this and online mix and fulfillment freight and the movement in provision the remainder, as we discussed on Slide 19. During the period, we continued to have a strong focus on managing the sell-through of our seasonal product lines and increased the proportion of our stock that is classified as continuity and required by our customers all year round. As noted before, we still believe we are on track with gross profit margin management, being 120 basis points better than FY '20 and 280 basis points better than FY '19. Cost of doing business was up $28 million, and this is where most of the cost of doing business discussed on Slide 20 has occurred for the reasons discussed. Online sales increased by a remarkable 93.6% in FY '22 half 1 compared to the prior period. Driven by the COVID-19 lockdown forcing a shift to the online channel, Click & Collect sales were up 122.3% as stores were still able to fulfill online orders during lockdown periods, making up 47.3% of online sales. There were no changes in store numbers for the period. Looking at Warehouse Stationery on Slide 27, the financial performance for Warehouse Stationery is a similar story to The Warehouse but with more of operating profit decline explained by trading performance. Sales were down 10.6% on the prior period. And Warehouse Stationery sales did decline the most of all the brands in Q1 at 22% down but did recover in Q2 to be 1.3% down and up 4.2% on FY '20. The reduction of gross profit explains most of the operating profit decline, declining 13.8% or $9.2 million. Gross profit margin percentage did decline 170 basis points primarily due to missed rebates as a result of lower volumes in the technology category. The Warehouse Stationery still maintains a group-leading gross profit margin percentage of 46.9%. Cost of doing business decreased by 3.4% despite some investment in store labor with respect to COVID-19 compliance requirements. There was a reduction in lease costs and advertising offsetting this investment. Overall operating profit decreased 43.6% to $9.7 million. Online sales continued to grow in FY '22 H1, increasing by 54.2% compared to the prior year, with Click & Collect sales growing 85.4% and making up 29.8% of online sales. The decrease in stores compared to the FY '21 H1 is due to closure of Henderson and Hornby stores in FY '21 H2, offset with the opening of a new store in Ormiston in March 2021. A total of 2 SWAS integrations were implemented in FY '22 H1, being Invercargill and Upper Hutt, bringing the total number to 27 versus 23 at the end of H1 FY '21. Looking at Noel Leeming. Noel Leeming was the overall strongest performing brand in the group. Sales were down 1.8% on the prior period due to the Q1 lockdown and stock availability as our suppliers grappled with disruption to their supply chains. Even so, we ended FY '22 H1 with the second highest H1 sales result in the brand's history at $582.7 million. The lockdown caused a significant shift to online, resulting in online sales increasing 79% and contributing more than 20% of total sales. Click & Collect continues to be our customers' favorite option for fulfilling their online purchases, comprising 57% of online sales. Gross profit margin held largely flat despite the increase in online activity. And cost of doing business came in slightly lower than in FY H1, contributing to an operating profit of $29.8 million, down 9.9% on the prior period. Since FY '21 H1, we closed 3 Noel Leeming stores, being Hunters Plaza, Morrinsville and Manukau Westfield, and opened 1 new store in Ormiston. And finally, Torpedo7 on Slide 29. Nick has touched on the performance in Torpedo7 already. Torpedo7 delivered the highest sales growth in the group. Customers embraced Torpedo7's online offering during lockdown and online sales increased 46.6% and Click & Collect service channel increasing 64.1%. Gross profit increased 8.4% to $34.8 million, with FY '21 H1 benefiting from strategic initiatives to reduce aged stock while improving gross profit margin. Gross profit margin was down 210 basis points and was impacted by freight costs primarily. Cost of doing business as a percentage of sales tracked ahead of last year with additional staffing with respect to COVID-19 compliance requirements and investment in headcount to enable strategic growth initiatives. FY '22 H1 operating profit of $2.8 million is down on the prior year but still in line with the plan towards increased profitability. Operational improvements are ongoing with a new ERP going live in 2023, which will replatform the business and enable further improvements. The number of Torpedo7 stores increased to 22 with Invercargill store, which opened in FY '22 Q2, and Napier, which opened in Q3 of FY '21. I'll now hand back to Joan to talk about FY '22 outlook.

The first half of FY '22 was largely impacted by store closures in the first quarter, but sales rebounded positively in the second quarter. We are, as we all know, currently in the midst of dealing with the Omicron variant, and that is impacting foot traffic in our stores across the country. Given our history with lockdowns and experiences offshore with Omicron, we are expecting consumer spending to rebound post further declines in Omicron case numbers and the relaxing of restrictions. We are very conscious of the current cost of living pressures and the impact of all of this on our customers. There also remains some volatility in our supply chain in both product supply and cost. Our financial position does remain very strong, and the ability of our people to navigate the volatility over the last 2 years gives us confidence in dealing with the uncertainties of the second half. As I said before, the Board was pleased to announce a fully imputed interim dividend of $0.10 per share for this half year. And as I said, the record date is the 6th of April, and the dividend will be paid on the 26th of April, represents a payout ratio of 72.2% of the FY '22 half year adjusted net profit. And as I said, it's fully imputed. Due to the continued uncertainty in the trading environment, the Board does not consider it appropriate to provide full year profit guidance at this time. But of course, the Board will continue to assess this position ahead of the year-end. Thank you. Thanks to Nick and Jonathan for the presentations, and I'm now going to open it up for questions.

[Operator Instructions] Thank you. We have no questions at this time, so I'll hand back to Joan for closing comments. Thank you.

Thank you very much, everyone. I just want to end up by reiterating my thanks to Nick and Jonathan but also to the entire leadership team and all of our team members at The Warehouse. We've now negotiated what has been a 2-year period of massive uncertainty. They've handled that incredibly well. They've had to balance a raft of competing imperatives, and they've done that without compromising our ability to execute our strategy. They've remained committed to our purpose and our vision, and they've remained focused on our values. So I'm very proud to be leading the company at this point in time. Thank you all again for your attendance this morning. It is much appreciated. Keep safe.