Ulta Beauty, Inc. (ULTA) Earnings Call Transcript & Summary

Welcome, and thank you for standing by. [Operator Instructions] Today's call is being recorded. [Operator Instructions] I would now like to turn the call over to Chris Horvers. Sir, you may begin.

Thank you. Good afternoon. I'm Chris Horvers. I'm very pleased to welcome Ulta Beauty today for our fireside chat as a part of our 6th Annual Retail Round Up. With me are CEO, Mary Dillon; President, Dave Kimbell; and Chief Financial Officer, Scott Settersten. We really appreciate your time management team during this very unprecedented time in the world. I'm sure all of our world has been turned upside down. And at the same time, we are trying to manage a "nonessential business". So we really appreciate you carving out some time to spend with us and with investors. Given the virtual format of our fireside chat, we decided the best way to do this is take questions via e-mail and I can pose them to the company. My e-mail is [email protected]. If you could use the header ULTA QUESTIONS in capital letters that will help to me find it in the inbox. But to start, we'll do our own set of questions and turn to e-mail as appropriate.

So Mary, clearly, unprecedented times right now. One question that we're asking all of our companies is how the consumer behavior is changing due to the COVID-19? First part of the question is, is how beauty behaves in a shelter-in-place environment? On one hand, it's consumable, people are all pantry loading and people have time on their hands. On the other hand, while there is more use of video and Zoom, there's just less social and this could hurt areas like makeup and fragrance. So I get it's fluid, but maybe what you've seen so far from a consumer behavior perspective?

Sure. Thank you. And Chris, thank you for hosting this in this unique format. Good for you. Glad we're still doing it. I'd start out by saying you're right. The current environment is really fluid and changing quickly. But honestly, I would say, we really feel that we have the right assortment, the right flexibility and nimbleness to manage through this. But it is clearly an unprecedented operating environment. So I don't think our team has ever been looking as hard as we are now. But at a high level, listen, we continue to believe that our target guests, which you know is the beauty enthusiasts, has an emotional deep connection with beauty and despite the economic environment, and we don't see that changing. So based on our researches, we do know that beauty enthusiasts love to shop for discovery and trial, no matter what channel they engage in and they don't see shopping as a chore. In terms of category performance, and you said this, we benefit from being replenishable and affordable indulgence and our category is not immune, but we think it should perform better over time than other sectors in retail when times are tough. That's certainly been our experience in the past. So back to your question about how people are working? Certainly, many people are working from home, right? But what we're seeing is they're still participating in a lot of virtual meetings and the better that visual and video technology gets, whether it's Microsoft Teams or Zoom, the more we think people are going to want to and we're seeing them showing up and wanting to look good and look like themselves, so they're not going to stop wearing and makeup altogether. We've even heard feedback from guests that they have some time to spare to experiment with different makeup looks that maybe they haven't tried before. So I mean I don't mean to make light of this, but a winged eyeliner is not easiest thing to pull off on a day when you really need to get it done. Or if you look on TikTok, for example, there's a really cool string right now, it's called Snow Miser or Heat Miser. It's very -- I know this is very tactical, but a really cool example of the expression and creativity that people are demonstrating right now when they're at home and they're engaging in digital. In this case, there's a really kind of cool split makeup look is a core part of it. So anyway, so listen, we think that people are going to stick to their daily steps, but actually -- and skin care and frankly, actually have more time to do them. So if you really follow a regime of cleanser, toner, serums, eye creams, moisturizers, having more time to do that is good. And we see people engaging and the skincare really represents an opportunity to do that. Facial mask, facial scrubs, again, those are things you probably have more time to do right now at home. There's also a lot of essentials in our assortment, like shampoo, conditioner, soap, self-care categories like bath that people are turning to at this time. So this intersection of stress relief, self-care, skin care and the fun and engagement in makeup, I think actually is playing out pretty well right now for us. There's also the notion of do-it-yourself approaches that people are needing to take on things like home hair color, root touchup, nail care products. So listen, when we're all going to go back to a new sense of normalcy, I really believe that the passion and the fun of beauty is going to continue to be ignited. It's been there. It's a core of self-expression, experimentation. So we're just making sure, frankly, that we're staying really engaged with people in their digital world. Of course, digital engagement is very high. We need to be there, and we are with relevant messages that I think are striking all the right tones about self-care and fun. Our e-commerce platform, we're certainly leveraging that. And I think, ultimately, staying top of mind as a beauty retailer that our guests love the most is what's going to allow us to come back strong. I think guests are rooting for us to come back strong, and we believe we will.

That's very helpful. I might have to engage in some self haircutting at some point, if they don't open up the barbershops in New York here.

I'm pretty good at that. So...

Clippers out and just go. Maybe you could talk about within that, obviously, cosmetics, you brought up -- people are experimenting in makeup right now because they have time at home. Is it making you think any differently in terms of the trajectory of cosmetics? Obviously, color cosmetics has been a tougher category. It's a big piece of your mix. So is there anything in there that maybe says that whenever the other side is that maybe that category actually rebounds more strongly?

Yes. Well, we hope so. I'll tell you what, since we have -- I have Dave and Scott here on our virtual fireside chat. So I'd love to have Dave just add some color, pun intended, on your question about makeup, if that's okay. So we'll let Dave jump in.

Yes, yes, absolutely. Yes, we -- I guess I'd start by saying, we do remain optimistic and confident about long-term potential of makeup. We believe that there will continue to be a high level of engagement in the category going forward and all the demographic trends that we've been talking about for a while, whether it's young consumers, Gen Z, millennials, Latinas, all over index and makeup, the passion and enthusiasm around makeup, we think will continue to be there well after this, despite this short-term disruption. Mary talked about some of the engagement that's going on right now. And while certainly, I mean everything has changed in this near-term moment, there's a lot of encouraging signs about just the passion and enthusiasm and exploration and discovery around makeup. So we're not going into this crisis. We've obviously been talking about concerns we have with the overall health of the category. It is in a down cycle, and that's not going to turn around immediately. But as we look forward, both these fundamental drivers, this enthusiasm we see in makeup, coupled with innovation that all of our brand partners have been working on before this crisis that will help, we think, stabilize and return the category to growth. One final, just, I think, more anecdote right now, but we're certainly watching it closely is engagement that we have with some of our virtual tools. So we have a GLAMlab on our app that allows our guests to try on makeup virtually. And we've seen a very significant increase in usage of that after our stores closed. And so as a new way for people to discover that. So some of these behaviors that people are discovering through this time, we think actually will help create some new behaviors that over the long term, could actually be good for the makeup category as well as skincare, as Mary talked about in other categories in our assortment.

That's very, very helpful. In terms of the -- have you seen much consumer -- you talked to these retailers in the past couple of days and it's day-to-day, it's the week-to-week. Have you seen much difference in terms of the geographic performance like in the New York, which was early in shelter -- shelter-in-place versus other parts of the country. Was there much variation between their performance and geographically?

You want me to take that, Mary?

I didn't realize I was on mute, gosh, you think I'd get that down by now, guys. Yes. No, I actually don't think we've seen a lot of variation. I mean for us, obviously, the biggest change was when we ended up needing to shut down the stores and saw significant uptick in e-commerce, I'd say pretty much across the board. I don't think there's been a real regional variation on that, David, if there's anything else you'd add, feel free. Maybe, I'm wrong.

We're seeing -- yes, there's certainly in our e-commerce business, demand across the country, even before our stores closed, we weren't seeing a lot of disruptions leading into that.

Yes. Understood. And then this morning, the big questions out there is e-commerce conversion. This morning, in the press release, you noted that the e-commerce business has accelerated last year. I think it grew in the high 20s. But at the same time, it also seems like your e-commerce fulfillment may be getting some stress in terms of the capacity and just looking at some of the commentary on social media. And you also I think, dialed up your free ship price level back to $35 after dropping it to $15. So obviously, it doesn't look like you're needing to lean into that side of the business. So any comments as to the sort of decretive acceleration in e-commerce? And you've great customer data, how much of those 80-odd percent of customers that are store-only historically have actually converted to be an online customer as well?

Yes. Well, it's -- we're really pleased and thankful that we've been doing the kind of investments that we have in our e-commerce business, that we have a team of people running the distribution centers that we have and working in the distribution centers and that we're able to keep that part of the business running in the states that we are operating. So it's a big, important part of our business. Now, having said that, of course, there's some constraints on the amount of product that we can ship from our DCs, but we're leaning into it hard. So I guess I would just step back and say, we are -- we're pleased that we're actually seeing some guests who have historically, to your point, only been -- have been store-only guests are actually shifting and engaging with us on online orders. Too early to quote the numbers of that. But we know that in the long run, the more people that we have become omnichannel shoppers for Ulta Beauty, the better. So the vast majority, as you said, 80% historically only shopping in stores, but those folks that were -- and now we're going to have an increasing number of omnichannel shoppers. They're just more and more engaged. They spend 3x more than a store-only guest historically. So we think that's all good and sets us up really well. The -- I guess, what I would just add to it is the distribution center capacity. So all of our DCs are mixed inventory for stores and e-commerce. And that also we think, is a good advantage for us. It allows us to have good levels of inventory across the country that we're able to match with demand. Now it's been -- it's challenging running in a time like this. Our distribution centers are kind of in a holiday mode in terms of amount of demand, which is great. And they're exceeding expectations every day, but having to work in different ways, right? So first and foremost, is the safety of our associates in those DCs. So we've always had, of course, high standards of cleanliness, but we had to add new rituals, new routines on that plus social distancing, plus not everybody is able to come to work on a given day, right? So we've been able to flex it, make sure that we've got adequate -- I'm pleased that our folks are really wanting to come to work and they're work may even have folks on our stores in the geographies of some of our distribution centers wanting to go and work in the DCs, and they're doing that. They're getting trained to do that. So -- but there is naturally some constraints in that you weren't able to sort of build up to a holiday mode. It takes weeks to do that. You don't just do that overnight. But we do see it as an opportunity. I'm proud of what we're achieving. Yes, you're right. We did lift up the free ship level, and that -- it was important, we think the right thing for us to do. But again, we're able to really see through our customer lens, what's happening, and we think it bodes well for us.

And just staying on this e-commerce front, there's a flurry of questions around e-commerce coming in. Do you think -- well, I guess first question is, do you -- in terms of the new customers to the brand, your -- is this time -- obviously, this time presents a long-term structural opportunity in so many levels for Ulta Beauty. In terms of the demand that you're seeing online, are you seeing an increase in more new customers? Or is it the existing customer just shifting channels?

Yes, I would say, first of all, way too early to start making predictions about all that. What I was referring to was, we are seeing early on an increase in guests that were current Ulta Beauty guests because we can see that, right, through our loyalty program data, who were store-only, who are now engaging with us online. Over time, we'll see -- I mean certainly, Dave and his team have done a great job of really, I'd say, having a very strong digital presence and I guess, relevant, I guess, messaging was what I would say in terms of the digital space, where we think we'll have an opportunity to also gain new guests. But right now, I'm looking at through the lens of our customer data and seeing beginnings of some channel shifts. So that's what I was referring to.

Got it. And then the other thing is you're in the -- I believe you're in the midst of one of your biggest promotions of the year in terms of 21 Days of Beauty. And can you talk about what you're seeing there? There's a lot -- there's concerns about the promotional environment, which we can talk about afterwards. But do you think that 21 Days is helping fuel that increased acceleration online?

Yes, I'll let Dave add. I mean 21 Days of Beauty has always been a strong online promotion for us. And so it actually, the timing in some ways was quite good. But Dave, why don't you to take Chris' question and add some color about?

Yes. Yes, as Mary said, I mean yes, this -- our shift to an online-only business as we closed our stores happened in the first week of our 3 week, 21 Days of Beauty that runs through this Saturday. And as Mary said, over the last couple of years, it's become -- it still plays a huge role in our stores. But it's been an even stronger e-commerce online event in part because it's a daily event every day is different. And so the ease of our customers being able to kind of come and visit us every day through our online. When our stores are open, our customers often complement that with the store visits. But in an online-only world, we're seeing strong engagement in that offer. And what we like about 21 Days of Beauty is that it's not just a standard promotion percentage off or something. It's a very -- it plays a very strategic role in our overall mix by very consistently moving guests up from mass into prestige. We, at very high rates, see guests discover new brands, enter a brand through an offer for the first time there in 21 Days of Beauty. That's why we do it twice a year is predominantly for the strategic benefit of shifting our consumers and moving them and exposing them to prestige items. So we're really pleased with that. We know the promotional activity is always intense. And certainly now, all of our competitors are trying to figure out how to navigate this, but -- during this event. But then even coming out of it, we're confident that we'll be able to continue to drive traffic, drive engagement, keep our guests engaged in Ulta Beauty through our e-commerce channel and feel like there's a lot of opportunity ahead of us as we navigate the store closure time frame.

And just dovetailing off that, are you seeing the department store channel raise the promotional posture around this category? It doesn't seem like you've really had to respond to that per se.

Yes, yes, I won't get specific on what other competitors are doing, but like, yes, we feel like we've got a clear strategy. We're focused on our efforts, 21 Days of Beauty now, but even going forward, we're confident that we can drive a strong level of traffic. We can driving enough traffic and enough engagement to take full advantage of the capacity that our DCs are building. And there, as Mary said, continuing to expand that and strengthen our capacity there. So we don't anticipate getting into a deep promotional, I guess, war with others in the industry. We feel like there's a focus for us just through our CRM efforts, our loyalty program, our assortment, the exclusives that we have online, that will allow us to continue to play a strategic game as we navigate this period.

Got it. And then in terms of thinking about the long-term perspective, we talk about a lot to investors how the share capture opportunity for Ulta is so vast, given who you compete against. And that this environment could sort of accelerate that opportunity, given what might happen in terms of store closures. And then on the other side of it -- and this was a question that just came in. On the other side of it, does this period of higher online growth teach people to do more shopping online? And then if there are more closures, what are the risks around the brands looking to partner with an Amazon or another online player in terms of taking that exclusivity away from the specialty channel? So your thoughts about how would those longer-term implications, how are you thinking about those?

Yes, Chris, obviously, all really good questions. And while we're managing sort of triage in the short term situation that we're in, which is very consuming. We're also spending a lot of our mind energy around how the dynamics and scenarios look going forward. So I think those are all the right questions. And I guess, I'd have to go back to something that we believe to be true because we've proven it time and again that beauty as a category is one that operates on many levels, the physical, the digital and even frankly, the emotional. And the emotional part of it is -- can be about how you look and feel after you engage in a beauty ritual, but also about interactions that you have with people in a store like Ulta Beauty, with trained associates who love to do this for a living. Services are a physical part of the equation. Now all of that, we know will probably look somewhat different in the future, given the situation that's happening right now with this virus and sort of how it plays out in the future in terms of continuing to control it, right? But so the physical, we think, nature of it, certainly, e-commerce has always been important to us and we've got a strong, robust platform assortments that are even exceed what we have in store. It's been our fastest-growing channel and we're going to see it probably be an even bigger part of the future, right, given what's happening today. But we think that our job is to say, okay, how do we play our offense, come out of this knowing what we know, knowing that a physical beauty experience is still going to be important, and we're going to be very creative about new ways to deliver it and compete aggressively as we are online. I think the fact that we are in a somewhat constrained supply mode right now in terms of how much we can produce out of our distribution centers, it allows us to really focus on really digitally engaging the people in ways that is very relevant in keeping us top of mind as a beauty retailer. So like I've always said, I can't control competition, but we can understand it. We can understand what makes us different. And there will be -- you could argue pluses and minuses, right, coming out of this. But I think we're very clear-eyed about this, and we feel very good. And our brand partners also feel very good about needing and wanting us to be a successful beauty retailer as we come out of this crisis time.

That's great. In terms of good segue, so looking beyond what's hopefully the next 6 weeks, 2 months, 3 months, I'm not sure. How do you think it plays out beyond that? And sort of what scenario analysis -- is a scenario analysis are you running? And then how are you thinking about going back to engage the customer at retail? One of the questions that we've heard is why didn't Ulta do a curbside option at this point? And so two parts of that. So how are you thinking about how it could play out beyond this immediate virus phase? And how are you thinking about the scenarios of how you will reengage with the customer?

Yes, sure. So maybe I'll start with the last part of the question, which is curbside. And listen, we are actively evaluating all sorts of ways that we can get back in the physical business, ASAP. We made the decision to close our stores from a public health and safety perspective, frankly, and whether it was mandated in some parts of the country or not. And we would have loved to have been doing -- buy online pickup in-store is a capability that we have in every store. So whether that's walking in the store, doing it curbside, it's not all that different, right? But that idea -- and we would like to be in that business again soon, and we're evaluating how to do that. We would have done it from the start, but frankly, we still had and have a situation across the country where there is some obligation to maintain social distancing, to stop the spread of the virus and putting associates in, telling them that there's risk, but we want you to go in the store, so do this was a little bit too early. So -- and we've got a strong e-commerce business, we've got inventory and products in the store that for the most part, don't have a shelf life or not super seasonal. So we felt that was the right thing for now. But certainly, as we look at scenarios around reopening, that is one of the first places that we may start, right? And may do that regionally. I'm not telling you exactly when and how, but certainly, we get that. That's your bigger picture question. Listen, I am and my team is, we are consulting with experts across the spectrum. Whether it's some of our investment bank partners, consultants, CEOs that have been through this across -- in China, we're staying connected with all the facts and data from health experts. So really trying to get the best lay of the land. And here's the big picture conclusion, nobody really knows exactly how long this is going to take and what the recovery is going to look like, but there's no short of models and ideas and help that we're getting out there. So I would just say we're modeling to sort of prepare for the worst, but hope for the best. And also be in a mode to be able to start-up, like I said, BOPIS, when the time is right, as a starting point. So I think we just need to take this a day at a time, but know that we're in a ready stance. We're doing a lot of really good work around. So once we open up the stores, what will need to be different. How do we do -- people are going to be desperate to get in -- not everybody would trust to get the home haircut, Chris. So -- but haircut and professional color and brows and facials, all those things, we're just putting our really inventive hats on with help from experts and say, how do we get back in that business and lead the way? Because nobody is going to be able to tell us how to do it or set the model, but we know that consumer demand will be out there. So I just -- overall, I would just say, given our foundation, our strong model, the unbelievable brand awareness and brand engagement and love that we have and a really dedicated creative team, we will figure this out, and we're doing the scenario planning right now to get us in a position to do that.

Got it. And maybe transitioning to, I think, the capital allocation structure, expense savings, you do have store closures. So this is a big influx of questions around that. So can you talk about what you've done from a capital preservation and liquidity perspective so far? And within that, talk about your decision to push off some of the investments as well?

Yes, no problem. First of all, I would just ask, is Scott on the call? Okay. So that's fine. It sounds like, Kiley, we don't have Scott yet, right? So I'll just jump in here. Oh, wait. I hear the clicking.

Yes, I don't think we --

So anyway, see...

So maybe you can talk about -- I think the liquidity.

I'll just -- I'll get it started. I just wanted to -- we're having a little technical difficulty here. But yes, I mean so listen, clearly, preserving liquidity, preserving cash is the top item on our agenda right now, like it is for everybody, right? So we start with a good strong balance sheet. But when you have no top line revenues out of your stores, that's obviously something you've got to plan for, and you certainly don't want to be in the position of have that happening forever. So I'd say that what we're -- the largest things that we've been pulling back on so far are controllable expenses, like head count additions, travel, training, all the stuff that we've talked about. But we took a stance to increase our liquidity, the precautionary measure of drawing down $800 million on our revolver was kind of step one. We're prioritizing all of our other obligations, account payables, rents, et cetera, and really trying to work through in a partnership way how we manage those cash flows. We talked about -- we suspended our buyback program. We're not planning to open 75 new stores. We're working on sort of how do you stage new stores and remodels when the time is right. But at the same token, we're also keeping an eye -- oh, and the other thing I'd say is Canada, so we decided to delay the Canada launch by 6 months, but still definitely planning that in 2021, we're going to be in stores and e-commerce in Canada. So all of those things, we think, are giving us some good financial flexibility. And this is something that we're working on every day to say how do we make sure that we preserve things that we need for the future, to come out strong, but also take the steps that are prudent and necessary right now to make sure that we just manage cash as well as we can, given that nobody really knows when we're back and opening stores.

As a follow-up to that, can you talk about the real estate side? So there's a couple of questions here. We've heard a lot of investors focus on the discussion with the landlords, someone has asked the company yesterday, have you paid April rent? And then secondarily, you've pushed -- you've slowed your store opens for the year. Obviously, there's some buildings that can happen and can't happen going on right now. But as you think about that push, do you think in 2021 that do we sort of like stack those openings, ultimately, when we figure out how many we can open this year?

Yes. So first of all, I'd say with the real estate, I'm not going to get super specific right now about this. But what I will tell you is like anybody that you've talked to in retail, this is a key issue. We are in contact with our landlord partners as we speak, reserving our rights under our leases, making them aware of our decision to close. We've got, I think, over 600 different landlords, some really, really small, some really, really big, so lots all over the Board. We want and believe we can maintain strong relationships with the landlord community. So we're just being really direct in partnership oriented and sharing the dilemma with them about the need for us to preserve liquidity and come out of this strong. We're one of the retailers that we believe they're going to need and want to be operating. So we're in those discussions. Again, I don't want to get specific about what we've agreed or not agreed to, but know that certainly, we think that there's a partnership here that's important for the long term, and we want to be a tenant of choice. And as for new stores, yes, so it really -- it's a little bit fluid. But in some cases, yes, you're right, there are some places where actually even doing construction is not even possible as crews can't work. Certainly, the other question in dilemma, as you can't open new stores and you have no stores open, and even when you think about opening stores, is it on a rolling basis, where is the demand and the traffic going to be? So we're just looking at all that cautiously. We know that we'll have some new stores opening this year. We'll push some of those into 2021 and be prudent about that not stacking them all on top of each other, but we're rethinking the timing of the rollout. But I think we're taking the prudent steps that you would expect us to, given the environment is pretty fluid right now.

Understood. Another question -- inbound question is, can you talk about the view of your -- the health of your core customer? And I think it's a bit of a demographic question in terms of you're seeing a lot of retail employment go down, restaurant employment, entertainment employment. Can you talk about the possible demographic overlap with some of these sort of employment categories? And maybe just generally size up to the extent that you have at household the income levels and those sorts of details?

Yes. Well, gosh, if we had that all mapped out, I'd be really impressed that we're that precise right now, but these are absolutely all the right questions. I mean there's kind of, I guess, two ways to think about it. One is certainly, listen, retail alone is about 1/4 of American jobs, right? So we know that there's a lot of unemployment happening there as well as travel and tourism. So we get that. And I guess, stepping back, our business model, we think, in some ways, it's quite adaptive because we've been through a recession before, of course, this is quite different. But given that we've got the range of price points from mass to prestige and every categories that we're in, actually, we think is -- we know as differentiated and distinctive and helpful at a time like this. The other thing I would say is that while the CARES Act that was passed and signed, actually has very robust unemployment provisions. So while there's going to be high unemployment numbers, as you've seen, the direct cash payment to households, combined with a 4-month unemployment plan that actually, in some cases, pay people more than maybe they were making before they lost their jobs, in some ways, provide some foundation, I guess, of income. Now having said that, listen, I don't know. I mean people have to prioritize their basics in life, right, their rents and their groceries and their child care and whatnot. So -- but we do know this is a category that is consumable. It's a small affordable luxury, and we think that we'll come out of this. We see our e-commerce demand is stronger than we might have even thought it was going to be a week ago. So -- but will the whole economy be hit by an unemployment and people having less money to spend? Sure.

Yes. It's funny. It's the question -- inbound questions. Some of these questions are more like preserve capital and other people are asking, well, why did you suspend share repurchases? So I'll ask the other side of the question.

Hey, welcome to buy world, I can't make everybody happy. Just kidding.

The decision to suspend share repurchases, can you -- what are your thoughts on that? And if you wanted to start buying back stock again, do you actually have to announce that you will?

Yes. Well, I'm certain -- Kiley can correct me if I'm wrong, but I'm guessing we probably would need to be -- you see the amount of disclosures we've been making lately. I think everything is a new world. So I don't know technically the answer, but I assume that would be the case. Kiley can correct me if I'm wrong. But to your first question, yes, I mean listen, we're just trying to be pragmatic, practical, preserve cash. And so you could make a case on share buyback, we think it's better to wait to see how the situation shakes out and get more confidence around a path -- a glide path to getting the vast majority of our revenue source, i.e., our stores back up and running and get more visibility to that. And I think once we see that, then that's another discussion that we can have. But for right now, we think it's a smart decision to wait, and that's why we did it.

Yes. And Mary, you are correct. We would have a disclosure obligation.

Okay. Now I have my law degree, yay. Just kidding, Chris. We're trying to just have a little bit -- make you laugh a little here. Okay, crazy times.

So I'm leaving you with the visual of me cutting my own hair. So it's really funny.

I got that.

And then in terms of -- yes. The other question is, historically, if you had a large player near you, let's say, Macy's, not as an example because they've closed a lot of stores. What sort of conversion have you seen typically or lift have you seen nearby or your estimate of sort of the market share that you took away from that?

Dave, do you want to jump in on that one?

Yes. I mean we certainly monitor and track closely the competitive environment. I'd say even those stores that remained open, where we've been successful in our efforts to capture share, we've been gaining share across all categories, and regardless of the competitive environment. So we feel confident about that. But no doubt, when -- if a major competitor were to close near us, we continue to establish ourselves as a strong player. In many cases, we already have connection with guests. One of the things about beauty enthusiasts is they do shop. They love beauty. So they'll shop at multiple places. So somebody that may be shopping at both us and, say, at Macy's, already has a relationship with us, and then we can work hard to strengthen that. So as those things happen, we certainly watch many of their local situations and make sure that we're prepared and poised to serve our guests in the best way possible and make sure that everything we're doing is set up to -- they like them, and we know that they'll come and we'll be able to capture more share in those situations.

Excellent. Well, with that, our time is up. I want to thank Mary and Dave and Scott and Kiley and Patrick for joining us today and hosting this meeting. And best of luck, stay healthy and good luck with the business.

Thank you, Chris.

Thank you.

Thank you. That concludes today's conference. You may disconnect at this time.