aritzia inc (atzaf) ceo brian hill on q3 2019 results -earningscalltranscript
Aritzia Inc (OTC:ATZAF) Third quarter 2019 earnings conference call 4: 30 p. m. on December 9, 2019 Relationship with investors Chief Executive Officer and Founder President and chief operating officer and company secretary Chief financial officer for the conference call, Mark pitry- CIBCMark Altschwager- Byron Hutchinson Bank of America Baker Lyon-Moscow Canaccord GenuityIrene Nattel- Royal Bank of Canada Capital Market BMO Capital Market TD Securities Thank you for your support. This is the conference operator. Welcome to Aritzia\'s 2019 earnings call for the third quarter. As a reminder, all participants are listening -- Only recording mode and meeting. After the speech, there will be an opportunity to ask questions. [ Operation instructions] I want to hand the meeting over to don Catherine now. Please continue. Catherine Tanger Thank you, operator, for all of you attending our 2019 earnings call for the third quarter. The result shared with me today is Brian Hill, founder, CEO and chairman; Jennifer Wong, president and chief operating officer; And Chief Financial Officer Todd Inglewood. We will start with a management discussion and then a question --and- Open answer period to analysts and investors. Please note that statements regarding this conference call may provide some information about our expectations, future plans and intentions that may constitute future information Look at the report. We will introduce you to the discussion and analysis of the management we have recently submitted, which includes a summary of the important assumptions behind this advance Forward-looking statements and certain significant risks and factors that may affect our future performance and our ability to achieve these forward-looking Look at the report. The investor relations section of SEDAR and the Aritzia website provides third quarter 2019 earnings release, relevant financial statements, discussions and analysis of management, and annual information sheets. com. Finally, unless otherwise stated, all the figures discussed at this conference call are Canadian dollars. I now transfer the call to Brian Hill, founder, CEO and chairman. Thank you, Catherine. Thank you for joining us today. First of all, I wish you a happy new year and thank our team for their hard work during the holidays and their contribution to an extraordinary season. We achieved another excellent quarter in the third quarter, and revenue growth continues to reflect the strength of all regions and all channels. The growing affinity for our brand, the special excitement of the United States, plus the beautiful autumn and winter season High quality products, as well as the all-round service that is desirable The channel shopping experience has driven 12. Comparable sales increased by 9%, achieving comparable growth for 17 consecutive quarters. That led to three. Annual cumulative comparable sales growth of 34. Third quarter 3%. We studied it in depth. 8% top- Revenue growth. We\'re really happy with this. Growth in production line revenue continued to flow to the profit line, resulting in 17 years. 4% growth in adjusted net income. Our brand affinity continues to grow in the US. Our US business has achieved incredible results, with revenue growing by 40%. This is driven by the accelerated comparable growth of our boutiques and online stores, as well as our new and expanded boutique and marketing efforts aimed at increasing brand awareness. In Canada, except for the equally powerful Store sales grew and we expanded our premier real estate portfolio to open boutiques in Quebec City and Toronto premium stores, our first real Aritzia store ever. Since the opening of TPO two months ago, TPO\'s profits have been incredible and TPO has repaid the original capital investors. To be clear, this is not the beginning of the launch of the outlet. That is to say, we will continue to explore the selective use of stores to transfer discontinued goods. Our e- Business continues to grow as we expect in the US and Canada. When Jennifer will discuss these plans soon, we have seen many exciting investments. Our brands are also growing in Canada and the United States. French magazine Vogue recently said that Ariza has become a label for the season. I am excited that we are highly supported by the major fashion influencers in the industry. In the past quarter, we have seen celebrities like Haley. Bieber, Gigi and Bella Hadid, Kaya Geber and some others who volunteered to represent our products. Meghan Markle, an ongoing fan, recently wore our Wilfred cocoon coat, a very important public appearance. In addition, Kendall Jenner, who has 100 million Instagram followers, launched our very successful Super puppy campaign. As we move forward, our influence will continue to be part of our marketing strategy. We owe our success for 34 years. Rate business model; Identify growth strategies and ongoing investments in infrastructure. We will continue to focus on what is useful to us. I will now transfer the call to Jennifer to discuss the investments further and then I will introduce you to our strategic growth plan. Thank you, Brian. Good afternoon. First of all, I will introduce the excellent performance of our new Vancouver distribution center since its inception. I will then discuss a number of infrastructure investments that, in addition to maximizing our current business, enable us to be long-termterm growth. After a seamless transition in last September, we have managed the first season of the new 225,000-square-foot distribution center successfully. We are very pleased with the functionality of the new facility and the performance of our team, who achieved excellent results during this peak sales period. During Black Friday, the new DC significantly increased throughput compared to the previous year. The new DC is designed to be scalable in both form and functionality. Therefore, in addition to the immediate benefits, this new distribution center should meet the growth of our West Coast in the next 8 to 10 years. Turn to numbers. We continue to invest in search engines and core website optimization, contributing to e-commerce Business growth this quarter. In the first quarter update, I talked about five key strategies to support our e-commerce Business growth will now be updated in every respect. The first strategy is to increase digital marketing to drive customer acquisition and retention. Our digital marketing initiatives include SEO enhancements, refining our email marketing and further leveraging our social media. In order to improve the results of search engine optimization, we have made a lot of technical improvements, including navigation crumbs, improvement of product descriptions and data -- Category naming. We are pleased with the positive impact this has had on the new customer business. Second, we focus on core website optimization, that is, improving the digital experience to ensure that aritzia. Com continues to enhance our customer experience. In October, the team released user reviews to give our customers a better understanding of health and quality when shopping digitally. We are excited about the feedback from our customers and, in fact, the product team is using this data to further improve the suitability and quality of our products. This feature improves our conversion rate, especially in the United States, where there are fewer boutiques Currently trying on items in person. Third, regarding the development of our customer notification program, we are in the early stages of using data and analysis to improve our understanding of our customers and their behavior. This will enable us to anticipate their needs and further exceed their expectations. We have selected software and service providers for our analytics Foundation. It is currently being implemented and is scheduled to be completed in the second half of fiscal 2020. This work will enable us to leverage the customer data collected at our new pointof-sale system. Fourth, we continue to develop all aspects of our Channel performance capability. Our new perspectiveof- The sales system is more than one Designed to align the annual strategy of our people, processes and systems so that our customers can purchase and receive our products through any of our channels. We are launching store inventory visibility with options and then additional systems and options including purchase-online, pick - Complete inventory in stores and stores. Finally, our fifth strategy is to strengthen our international website and explore opportunities to expand our international online business. We continue to evaluate our international website, as well as our ability to ship to international markets, to expand our boutique network by increasing brand awareness, gathering intelligence and identifying international markets, laying the foundation for future expansion Looking forward to the future, we have more developments to improve our digital experience, such as a cleaner interface, enhanced graphics, mobile focus checkout and all of these with omni- Channel enhancements will help improve the online customer experience. Our recent investment is the best. in- We will strengthen sales through business intelligence and analysis. Following the successful distribution center and point-of- The next business transformation and underlying technology we are implementing is a product lifecycle management system or PLM. The PLM system will manage all data and support the process of bringing our products to market. This will enable us to focus on innovation, improve quality, reduce the speed of listing where appropriate, and ultimately optimize manufacturing costs. We are close to the end of the selection process and will start designing and implementing it soon. I will go back and talk to Brian about our future growth strategy. Thank you, Jennifer. As a reminder of growth strategy, we are investing in developing our e-commerce Expand our boutique network, promote exclusive brand and product innovation, and establish brand awareness, Profitability. Specifically, our electronics Business is strong in Canada and the US, and we will continue to enjoy the benefits that Jennifer has just shared. As we mentioned in our last conference call, our growing brand awareness among customers and landlords continues to add new boutique opportunities to fiscal 2020, leading to our most powerful American boutique pipeline to date Due to our outstanding performance, excitement about the brand and the most popular real estate environment, we see and benefit from great rental opportunities. The current negotiations will allow us to open about 6 boutiques in the United States, 4 of which are in the new market. In Canada, our Bloor Street flagship store, which will reopen in February, will be twice the size of the previous, nearly 11,000 square feet, providing an ideal shopping experience for our largest market. Looking forward to 2020, we plan to add another three to four boutiques in Canada. Our main marketing objective of building brand awareness is still a key component of our overall strategy as we see the acceleration of influencer programs and we will continue to use paid and organic influences, ensure coverage of celebrities and digital influencers, which will speed up word-of- Acquisition of new customers. At the heart of our basic marketing strategy, we will also continue to focus on improving the customer experience by optimizing content and creative initiatives to surprise and delight our customers. In addition, we will be closely related to the customer work identified earlier in the phone and continue to drive retention through customer activation. Finally, long- Long-term profitability remains a focus. We believe in driving- Revenue growth is reflected in our bottom line. Todd will tell more about the financial highlights in the near future. All in all, we are excited about the growth and financial performance of our boutiques and online stores in Canada and the United States in the third quarter. We continue to drive strategic investment in e-commerce The business and the expansion of our top boutique network provide a strong channel for fiscal 2020, including a new market that will expand our geographic base in the United States. In addition, we will continue to incorporate influential people into a broader marketing strategy to bring more affinity to our brand. As Jennifer mentioned, we are investing in the bestin- State-of-the-art infrastructure and technology solutions that enable us to gain insight into customer storytelling initiatives and enhance our full range of services Channel capability. Investments like this will allow Aritzia to continue to enhance our customer experience. We look forward to the success of fiscal 2020, which starts in the exciting spring. With this, I will transfer the call to Todd to review our financial results in further detail. Thank you, Brian. Good afternoon. For echo Brian, we are very pleased to have achieved outstanding results in the third quarter after strong performance in the first half of this year. Net income increased by 18 in the third quarter. From last year of 8% dollar to 0. 243 billion to 0. 204 billion beauty yuan. Revenue growth is driven by the growth of our e-commerce. Business, and the strong performance of our boutiques in Canada and the United States. We are particularly pleased with our US business and, driven by our new and existing boutiques, our business has again generated 40% revenue growth this quarter We invest in marketing and business. Comparable sales increased by 12. Accelerate 9% from the 11 th. We saw a 5% growth in the second quarter. Comp rose was strongly welcomed by our autumn and winter products. In addition, as the prominence of the period in Canada continues to grow, we have held a successful Black Friday event. Net income also benefited from the addition of eight new boutiques and five expanded or relocated boutiques since the end of last year\'s third quarter. Gross profit margin for the quarter was 43. 1% compared to 44. 8% in the third quarter last year. The gross profit margin decline of 170 basis points is due to the impact of the Canadian dollar depreciation of 110 basis points, the remaining Gross profit margin decline is mainly driven by the increase in raw material costs, which is partially offset by the ongoing procurement plan. Our SG & A fee as A percentage of net income was the same as last year, at 23. 3%. Our ongoing investments in personnel, technology and infrastructure offset the leverage of fixed costs. EBITDA increased by 14 after adjustment. 3% to $57. 1 million or 23 Net income was 5%, compared to $50 million or $24. Net income for the third quarter of last year was 4%. Adjusted net income increased by 17. 4% to $35. $9 million or $0. Compared to adjusted net income of $30, $31 per diluted share. $6 million or $0. Diluted in the third quarter of last year, $26 per share. Our cash balance at the end of the quarter was $0. 123 billion, up from $105. The third quarter ended last year at 2 million. The cash balance increased by $18 million after $59. 1 million payment to reduce our credit line and $9. Over the past 12 months, 4 million of the shares have been repurchased. Long- As of the end of the quarter, regular debt was $75 million, compared to $134 in the same period. The third quarter ended last year at 1 million. Inventory at the end of the third quarter was $106. 4 million, reflecting 15. Up 4% from the end of last year\'s third quarter. We bought back 304,000 shares through NCIB this quarter. This made us buy back a total of 550,000 shares since the implementation of NCIB, with a total cash cost of $9. 4 million. According to the market situation, we will continue to buy back the stock in an opportunity manner. Turn to our point of view. As mentioned earlier, we have had an unusual autumn and winter season, including Canada\'s increasingly prominent \"Black Friday\", which continues to increase revenue in the fourth quarter to the third quarter. We look forward to healthy and calm sales at the end of the season and comparable sales in mid-term Single digits in the fourth quarter. Due to the further weakening of Canada\'s economy and the continued pressure from rising raw material costs, we now expect a modest decline in gross profit margin for this fiscal year. We continue to expect the adjusted EBITDA profit margin this year to be consistent with fiscal 2018. Finally, we are very satisfied with our financial performance. We are well- Able to drive sustained revenue and earnings growth and increase shareholder value as we continue to meet or exceed our stated fiscal 2020 2021 performance target. We welcome questions now. Operator? Operational issuesand-Answer Session[ Operation instructions] The first question comes from Mark Petrie of CIBC. Please continue. Good afternoon, congrats this section. Clearly, the United States is still a clear advantage. Your growth there is very methodical and I don\'t think you will deviate from this approach, but, even with that in mind, can you tell us your thoughts on opening six stores next year? Can you see anything that can push this number higher? BrianHillYes, thank you for your call or question. We, again, we put a lot of iron in the fire, we are right to wait for the opportunity, the negotiations are like this, the marking conditions are like this, the vacancy in this shopping center is like this, sometimes things take time. Sometimes there are things like expansion. This is the most we open at any point in time in the United States. So we are very happy with that, but we are still negotiating on some of the other deals and we can confirm how many deals we expect to start at this time. This number may also increase slightly, and it seems to be a healthy open schedule next year. So I mean, we\'re never going to be ahead of ourselves here, and we think there are six in the US that we digest these and continue to push our e-commerce The same is true of American business channels. We think our growth in the US was 40% in the last quarter, and before that I believe we are close to 50%. We believe that the current growth rate in the United States is quite healthy. Does MarkPetrieYes and these six include more popups that I think you \'ve used? BrianHillNo. We\'re watching other pop music. Ups is also six all-line Aritzia stores, all in the extremely high AAA center with a very good location and a large footprint. So these are all meaningful store openings in key markets, four of which we mentioned are in new markets, and for many years to come they will be our flagship stores in those markets. So we\'re excited about this. Okay. And then in the US, I mean obviously you highlighted the top Online revenue growth, you highlight the impact of using social media, which clearly pays off in building brand awareness. What do you think about the next year? I mean, is there a lot of runway in terms of taking advantage of what you\'re already doing, or can you move forward with additional plans, things like co-operation or something like that? BrianHillWe\'s looking at everything now. We\'ve-- The promotions and marketing we did in the US later this year were very successful. So we will not give up on these and we will continue to look for opportunities to increase marketing and brand awareness in the US. I think there are many opportunities and potential opportunities ahead of us. Brand awareness is very high, we can continue to improve. I think we just found the tip of the iceberg. We are recognized by a lot of influential important people and celebrities, but we still have a long way to go, and in the public, we have become the same brand in the United States as in Canada. So there are many opportunities ahead of us, and we will explore all of them, and there is no doubt that we will pursue some of them. Thank you. The last one. I was wondering Todd, could you elaborate on the comments on the flat margins of EBITDA this year. Their growth this year is very significant. to- Date, if you can detail the driver behind the fourth quarter. ToddIngledewAbsolutely. This will be driven by the expected pressure of our fourth quarter gross profit margin and SG flat & profits from other earnings, closely related to our hedging plan, we see the benefits from the realized benefits of forward contracts. Markpetrieok, then the continuation of foreign exchange, then maybe more of the raw material, the pressure on gross profit margin? Toddingledeit is really a further weakening of the Canadian dollar. We will see the extra pressure there and then continue to bear the pressure on the cost of raw materials. If I could add, these raw material costs really hit us in the third and fourth quarters. That\'s when it hit us. So they didn\'t hit us once or twice as expected and our inventory is very clean now. So our price reduction is actually very good. This is only two other factors that make sense for us, foreign exchange and raw material costs. The next question comes from Mark Altschwager OperatorThe and Boulder Good afternoon Markaltschwager, thanks and congrats for a great quarter. At this point, I think, just concluded the discussion on gross margin. Looking at the fourth quarter of 2019, can you discuss some of the actions you have taken to reduce some of the raw material pressure? Given that some of the pressure seems to be intensifying, especially with regard to foreign exchange, wonder if this will change your perception of the price increase. Yes. Therefore, in terms of gross profit pressure, the initiatives and mitigation measures that we are considering will be more applicable to fy20. As you said, we are constantly reviewing our pricing and opportunities in this regard, and then we have our ongoing procurement plan, this will offset some of the pressures we have seen from the growth of raw materials. BrianHillAnd we have made some great progress in purchasing and purchasing opportunities, but the price has dropped, the price of wool has risen, and some other goods are also increasing meaningfully. That is to say, one thing in the future, and more in the medium and long term, is that as our US business continues to grow, less foreign exchange is also a factor for us. Therefore, we look forward to the days when foreign exchange has less impact on us. MarkAltschwagerThank you and then on the product side. The press release refers to products that drive growth. I know that in recent quarters, trading is indeed the main driver of comp, and I\'m curious that you may have seen a little bit of improvement from the AUR perspective as well. What color is there? Yes. Therefore, a strong welcome to our products is still the driving force for our comp. As we have said in all towns and all regions, we have seen strength, but we have seen, especially this quarter, the driving force of the average selling price increase given the success of our coat project. Although we still believe that traffic and trading are the main drivers, we do see another rise in the average selling price due to the success of our coat program. The next question comes from Lorraine Hutchinson of Merrill Lynch. Thank you. Good afternoon. I want to know more about the dynamics in a quarter. It sounds like you pulled some sales to November on Black Friday, December, but your promotion rhythm and merchandise profit seem to be in line with your plan. Can you talk about how you did it? So how will this affect the outlook for same-store sales in the fourth quarter? Let me get this. So what is happening in Canada is that we have begun to reflect the period of sales in the US. We adopted Black Friday and corresponding sales two or three years ago, which is gaining momentum in the Canadian market. So this is not necessarily what we are launching and doing. This is just what is happening in the market, but we have done a great job, even though we are taking advantage of this. As transportation and procurement shifted to this period at the end of November. We and our team just- Very speculative in taking advantage of this. This will definitely affect sales in early December. I mean, let\'s look at what used to be a normal week and now nothing but a normal week. This is one of the best shopping weeks of the year and the best income week of the year. So the money comes from somewhere, and we now jokingly call it the hangover in early December, because as more and more money is spent in the last week of November, we saw that our sales were checked in the first two weeks of December. We can\'t see this in the United States because it has always been like this. Things haven\'t changed, but we see a shift from early December to November. So that affects the first few weeks of December, and then as these things happen, we start catching up again. But this is staying. It won\'t change at this time, so we have to be prepared and try our best to make use of it. This is just a new reality. So we don\'t really focus on today\'s sales in December and early December compared to four years ago, but we think that\'s the overall balance we think. Overall, we are very happy with the holiday which has been running in Canada for about 4 months in the past From the week of December 10-1 to the 10 th, but now it lasts six or seven weeks according to the time of thanksgiving. So now we see it as six or seven weeks, and based on that, we are very excited about the performance of our sales, stores and staff during this time. The next question comes from Patricia Baker and Scotiabank. Thank you very much, I will congratulate you on a great quarter. Just wanted to follow up a little on Lolin\'s issue. So of course I understand that Canada uses black Friday to pull early holiday sales from the fourth quarter to the third quarter, but I\'m just curious that it doesn\'t have any impact on your profit and drive those sales, will they have more promotions? Do you want this or--Yes. I think, as we said in the press release, we have made continuous price cuts during the quarterover-quarter. So we have no extra pressure. PatriciaBakerOkay, that\'s very interesting. Then back to the overall situation in the third quarter, can you talk about the categories that have done very well for you, and whether the strength of the US is differentS. Looking at Canada from a product perspective? BrianHillSo, yes, I mean, one of the things that we have always been proud of is that we have all kinds of clothes. Whether it\'s t- Shirt, sweater, coat, pants dress, we have always been very focused on keeping balance there. Of course we see it, and it can be said that we don\'t really see any difference in the US and Canada and in our products. The difference we see is more from east to west. So the New York shows are a bit like Toronto, Vancouver, Calgary, and Seattle. Then, as we enter a temperate climate like San Francisco and Los Angeles, we will certainly see a difference in the products sold for us. But we have great coat season and we have great sweater season and warm weather products. We had a great season but it was no different from what we had in the past. And so we see -- We just see a balance and how we sell our products, which we think is very important for maintaining profitability and growth. It just has a balanced approach to all the products we sell. Obviously we have items that sell better than others and they will develop over time, which is natural, but we don\'t see anything unusual that we haven\'t seen in the past The next question comes from Camilo, Lyon. Thank you. Good afternoon. I will apologize in advance for my voice. You talked a lot about the success of your influencer campaign in the United States. I\'m curious, you said that you will continue to accelerate in 2019, curious to know if this will be part of the marketing dollar increment, or are the marketing dollars you plan to allocate to this particular bucket next year going to change? Brian, Camilo, Brian. Hope you get better soon. In fact, we think we will spend some incremental marketing money. Some of them will be transferred, but some of them will definitely be incremental, depending on the amount of projects we log in to successfully here will be incremental. Nevertheless, we looked at all the incremental dollars used for marketing and thought there was a return in the short term. So, obviously, for a long time Short-term brand returns, but there is also a short-term Sales impact. We want to provide any kind of incremental marketing funds in the short term. Sales impact. Therefore, we should not see profits or anything hit by doing so. Instead, I think our goal is to see the short term. By implementing these marketing initiatives, incremental marketing initiatives, and beneficial additional benefits, long-term growth in profits will expose our brand to more people and will certainly drive it. So we see marketing as short-term. Long term sales and long term sales Brand promotion. We expect any incremental dollar to be recovered and then have some in both. Camilonia sounds good and seems to work well for you. In terms of the new stores you plan to open in the United States, following these routes, these stores are used in new markets, can you tell us the online demand trends you see in these markets? I think it\'s going to get you to chase these markets because you see a lot of customer needs from these regions, but I want to clarify that and make sure that\'s the case. BrianHillYes. I mean, of course we\'re going to focus on that, but that\'s not the only issue we\'re looking. Obviously, we are focusing on shopping malls and e-commerce markets. It is a business market for us, but it may have five equivalent centers or places that we can open. However, another market may be a strong one, but there may be a major shopping destination, not even a strong one, but only a major shopping destination. So this may be the goal before we have a bigger email Business platform. However, it is not obvious which store we will open. To take advantage of this, we have to open a few. So let\'s take a look. Business is one of the data points. We watched shopping malls and street shows. Let\'s see the weather. We focus on operational synergies and so on. Then is the time and opportunity to open these stores. I mean, our business in the US is very good now, and we feel that we can now be open in any major shopping destination in the US and do a very good job. We see a lot of deals and opportunities in these markets and in these places. So, of course, we will consider these data points, but at the end of the day, everything we open now is profitable. So we continue to explore as much as we can and pick what we think is most profitable. Camilyongreat. The last question is that you can provide a wide variety of clothing for your customers. I would like to know if you see any difference in the growth rate between the cowboy series you are launching more and your sports series, constant? If that tells you where fashion trends are going? BrianHillYes. I mean there are a lot of different fashion trends and some of them are male Some of them are female-led, of course. The funny thing about the cowboy is that it was very successful, we sold out, and even though we received the second batch of pretty big Cowboys before the holiday, it sold out as well. So we haven\'t really seen the Cowboys affect our bottom line yet. We have some big goods and are now starting to properly stock up the Cowboys for our new denim plan early this year. We hope to see a more meaningful decline in the first quarter. However, it seems that there are still customers in our sportswear, which is done very well. But we sell fashion. We sell sports. we sell denim. We sell functional clothing and some things like coats. We are still doing very well in clothing and young fashion. As you mentioned, we have a wide range of customers and we don\'t seem to focus on any particular project and/or specific category. By doing so, I think it allows us to continue to grow for a quarter in a row. The next question comes from Irene Nattel in RBC Capital Markets. Irenattelanks and great quarter again. Of course you mentioned your name as a coat, you mentioned the cowboy, wanted to know the leather, and you also wanted to know that you classified the places that were different. Are you considering any key lessons or gains in your spring/summer days? BrianHillI means that not only do we perform well in terms of products and sales, but we also do well in terms of infrastructure and improvement. So I can get Jennifer to talk about that, but because we will only build on that. I mean, as you know, Irene, we have core products in our store and we continue to sell this for a season. So we have been doing a good job on this product. As much as leather; We will continue to expand this opportunity. We have something meaningful. - , We had a very expensive leather jacket coming in and sold out even before it went live, in all our units. Of course, we didn\'t buy a lot of things, but it was shocking for us that the price was four digits. We didn\'t sell anything at that price before, and we sold it out even before it landed on our floor. Therefore, we continue to explore various opportunities, and frankly, an opportunity actually leaves us with more confusion and insight, and we do a good job in the products at this price point. We will therefore continue to do our best to build on all successes. Our whole idea is to test something so we can finish it in the next season and build on them. Therefore, we are not only reviewing the success from autumn, winter to spring, but also the success from the previous year to spring, summer, and strive to build on these successes. So we look forward to the exciting spring press conference and the exciting spring/summer season coming soon. The next question comes from Stephen MacLeod at BMO. Thank you. Good afternoon. I just want to see America. S. Can you talk about where your new store will open, where the new four markets will be compared to the new market or the two existing ones, or give me a little more color? BrianHillThe two existing markets are in and around Manhattan and we continue to do well in sales. As you know, this is a very, very big market. And then the rest of us just-- We actually have to draw a map and figure out where our next store will be. We just go along the coast, the East Coast, and slowly along the East Coast. Continue along the West and Central West. We are not opening at the Ala Moana mall in Hawaii right now and unfortunately for most of our Vancouver team they will be happy to check out that store or check in once a week. Currently at this point in time, we don\'t have anything clear in Los Angeles and there is no expansion there. We are doing some deals there, but we may see them in the second year. As a result, we still won\'t plunge into too much warm weather, but we will continue to expand some in the warmer, warmer weather market. So this is basically a mix of what we are doing and continue to grow in the market and in the new market. StephenMcLeodOkay, great. BrianHillSorry sorry I will elaborate but I don\'t know if our lease is finalized at this time. So I don\'t want to share the details with you at this time. I don\'t want to be shy here. I just want to make sure that after receiving this call, I don\'t have a real estate department coming in, walk into my office and get in trouble here. Yes, of course. thank you, Brian. Then I thought, perhaps without giving too much detail, the time was --- Can you give a little color at the opening time before 2020? BrianHillI wasn\'t sure when they were specific, Todd was turning, and he knew more when they were turning. Usually we open them in spring and then in autumn. We try not to open a lot between the two, but we have a schedule. We have certain abilities. So when we are thinking about opening a new store, we are thinking about repositioning. Repositioning is just as incremental as the new store, because in this case we are basically building a brand new store and doing new rentals and everything else. So we are internally, though externally, and we think they are different because there is a lot more incremental sales for a person than incremental sales and repositioning. The amount of logistics on our side is still the same. So we will fill out our dance cards accordingly. But, Todd, is there anything you want to share? ToddIngledewWell, I think the next conference call will provide the pace of the store as next year looks forward. StephenMcLeodOkay, this is very helpful. Then, I just want to follow up on another issue, just like you have some very positive comments in the spring, once you get through the weak or not, but given the strong in the third quarter, the fourth quarter is relatively slow, what special thing did you launch in the spring and you expect to be a particularly important comp driver? Or is this just an overall series and a wider mix of your upcoming listings? BrianHillI sees this as a whole collection and a broader combination. It\'s a bit double. Still, because we had such a wonderful spring and summer last year, we should be able to build on that. On the other hand, the competition last spring/summer also became more challenging. So it\'s kind of double. But we are excited. Our product looks great now. Our customers responded very well. Whenever a new season comes, new items look fresh, and everyone seems excited, both inside and outside. So at this time of year, we are always excited to start looking for and introducing new products to our customers. Stephanie mclawdokayThat\'s great. Finally, Jennifer, you mentioned that the PLM system is your next important infrastructure milestone, can you please give a little color on how this new system differs from the way you currently manage the product lifecycle? Yes, now our system is that we use SAT, a lot of things are the basis of spreadsheets, and our team follows a very strict development process that has been perfected and honed over the years. In addition to automating many of the current manual activities, the system will not replace anything. In this way, our team and people can have less busy work, more practical innovation work and more value. added work. So as far as our scalability is concerned, we see this as a system necessary to achieve our growth and further expansion. Keep our product cost and schedule consistent. The next question comes from meagoda Annett of TD Securities. Thank you all. Good afternoon. Given the strong position of the balance sheet, can you talk about your priorities for using cash, in particular the opportunities for organic growth? I know you talked about that, but at some point did you decide it was time to really put your feet on the gas and increase the push to the USS. Markets like you need to see in order to really decide to move on and accelerate your growth plan? BrianHillYes. I don\'t think having cash is really an inspiration for us to continue to accelerate our entry into the US, not for us to enter the new market in the US. I think we have a plan. We will stick to this plan. We are very profitable. What I want to say is that we are looking for cash. I don\'t think we ever have so much cash on our balance sheet. So it\'s a little new for us. We will certainly consider certain opportunities, but in our strategic planning, we will also re-analyze various other opportunities every year. So we will continue to look at these issues, but at some point in time, yes, we will start looking for reasons to invest in these cash, and how we can invest in these cash at this time is not clear yet, but now, we haven\'t made an expansion decision based on excess cash on our balance sheet. Can you give any ideas completely around the current NCIB? Toddingledeyes, as in the last three quarters, we will continue to make opportunity purchases based on market conditions. I think, as Brian said, we are considering our strategic use of cash next year and we will provide further updates once we make those decisions. The next questions come from Dylan Carden and William Blair. Thank you very much. I hope to get an update on the direct channel. If you\'re back in a year or so, it\'s really expected, starting to see some slowdown, and now also worrying about growth rates, but it seems like a lot of things are happening from a marketing perspective. I don\'t know what comment you saw in the market where you opened the new store? This is how to interact with that channel? So, it is suggested that we may see more stability, or even direct acceleration, and then under this channel target, you may have a place in the business for the 2021 quarter? Anything, I know I can\'t get the exact number, but I would appreciate it if there were any comments. When we say our e- Business accelerated this quarter, we saw the power of acceleration in the market, we opened in the new market. So if we open up a new market in Canada, these markets do grow faster than the rest of the United States or even Canada. So there is a strong correlation there, but again we are very happy with the growth of our e-commerce This trend will continue. DylanCardenSorry is a fair take-out, the driving force for accelerating growth next year. Toddingledew is just the strength in the business, the strength in the channel of our business. DylanCardenIn is consistent with the target of the business for the first quarter of 2021, and this situation has not changed- Correct. Thank you very much. The only thing Toddingledew really changed was that our sales in retail stores grew faster than we originally predicted. So that the e- The business team is trying to do their best and do a good job in the competition as the number 25% is constantly changing. So we are still the target. We still believe we will get there, but the figure has changed as sales continue to grow in our same store and we are raising the stakes. The next question comes from Mark Petrie of CIBC. MarkPetrieYes. Hi, I just wanted to follow up on some of the comments and link it to the performance of Chicago, maybe opening the Chicago flagship could open up the opportunity in terms of attacking luxury customers. Your comment on the leather jacket launch. Then, Todd, I think you mentioned that the average selling price is up, maybe it\'s just a mix, but I guess my question is, do you think it\'s possible to sort the items up, so as to continuously see higher price points in the store. BrianHillWe got a request for more advanced products and we also got a request for cheaper products. I didn\'t have a month because some customers didn\'t contact me directly and complained that the price of Aritzia was too high. This has been consistent in the last 34 years. That is to say, we have achieved great success at some senior levels. end products. Whether it\'s a personal item or our Le Fou and 1- The 01 line has been sold out for us at a very high price. So we don\'t have to, we don\'t see that we continue to change our entire portfolio specifically. We just think of expanding our products and expanding our portfolio. So we do offer some high end overhead fabrics and products, and at the same time we want to make sure that we are also approachable and achievable for young customers. We don\'t want to alienate them. So we have both methods. We will be opening in the Hudson Yard in Manhattan soon. Of course, this will be a higher-end customer. There\'s a lot of high around us- Our high-end customers Terminal retailers within the new complex. We\'ll see what\'s going on there, but our Rush Street store certainly gives us the confidence to open in this mall. So as we continue to focus on the store, we think we will succeed in some places. Then, it\'s also in our position. Our Rush Street gives us confidence that we can perform very well in some of the luxury players. So we\'re looking, we\'re looking at all the locations, but if you\'re 50, usually at the end of the day You will succeed in the end. The location of the hotel is very good. So, both in a high End shopping malls or larger shopping mallshave- As long as you have a good position, you will succeed as long as you do your thing- You did a good job. End of Q &. The problem is over. and -answer session. I want to return the meeting to Brian Hill at the end of my speech. Brian HillThank thank you for participating in our special results for the third quarter and our plans for future growth. Thank you for your questions and support today. As we continue to take advantage of our strong business model, we are able to provide both Revenue growth. With strong operating profit, we maintain confidence in our ability to meet or exceed our long-term needs Target and create shareholder value. I am proud of the fashion industry we have become and continue to be passionate about the future of Ariza. Thank you again for your call and we look forward to talking to you soon. Bye, bye. This is the end of today\'s conference call. You may disconnect the line. Thank you for your participation and wish you a happy day.