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Edited Transcript of ZO1.DE earnings conference call or presentation 14-May-20 8:00am GMT

·31 min read

Q1 2020 Zooplus AG Earnings Call Jun 18, 2020 (Thomson StreetEvents) -- Edited Transcript of Zooplus AG earnings conference call or presentation Thursday, May 14, 2020 at 8:00:00am GMT TEXT version of Transcript ================================================================================ Corporate Participants ================================================================================ * Cornelius Patt zooplus AG - Chairman of the Management Board & CEO ================================================================================ Conference Call Participants ================================================================================ * Alvira Hamid Rao Barclays Bank PLC, Research Division - Research Analyst * Clara Kamenicek MainFirst Bank AG, Research Division - Analyst * Volker Bosse Baader-Helvea Equity Research - Co-Head of Equity Research ================================================================================ Presentation -------------------------------------------------------------------------------- Operator [1] -------------------------------------------------------------------------------- Good day, and welcome to the Q1 results 2020 conference call. Today's conference is being recorded. At this time, I would like to turn the conference over to Dr. Cornelius Patt, CEO. Please go ahead. -------------------------------------------------------------------------------- Cornelius Patt, zooplus AG - Chairman of the Management Board & CEO [2] -------------------------------------------------------------------------------- Hello, and very warm welcome also here from Munich. We can offer today what I would call a refreshing break from the stream of troubled and difficult-to-read news. In fact, zooplus will present, today, consistently good news. We'll establish a bit of the corona context, but that would be a short introduction really of the context in which we operate. We will go through all the top line performance KPIs. We'll look into cost efficiency. I mean, we will look into marketing efficiency. We will have some information on the margin development. And then, we will make a comparison of 2019, the key learnings from it. And we will comment shortly on the updated guidance that has been issued on May 7. So let's go through this agenda one by one. We're going to be a little bit more compact than last time on March 25. We expect that we can have some extended time for Q&A and we will simply be faster than last time and leave more space for the other daily duties. So the corona context has 2 aspects for us. One aspect is that we learn -- we knew about it, but we now also have it improve by customer behavior -- that pet food is seen as an essential category to pet owners. It ranks exactly at the same level as catering for their own nutrition. So what we see is that during the corona crisis, people were stockpiling. They were making sure that they don't run out of supplies. But also, it's important to note that the competing channels -- competing to zooplus is mainly grocery, so supermarkets, but it's also the specialty trade -- remained operational in most of the geographies of Europe. So what you see is sales figures and sales performance that is driven by demand but not that much by artificial shift between the channels because all channels -- online, off-line, grocery and specialty -- were basically operational during the crisis. Second aspect of corona context is how good have we been doing in -- entering into a crisis mode in operating the company and also operating the business model. We're putting a strong emphasis on safety first. And that's not only for our own team, but that's also for the partners, in particular, the logistics partners. So far, that has proven to be very successful. So both our team and our partners' teams and our fulfillment centers are fully operational. Secondly, we're looking into giving -- because there was a spike in demand, giving priority to our loyal customer base and that was highly appreciated and also when we received -- as we get feedback, in particular, through social media. We also see that availability of products and services, which was, for brief moments, a bit of a concern, continues to relax. So we see that the factories of the industry brands and our own portfolio of brands are all fully operational and delivering. Lastly, we made sure that the financial stability of the business is secured under all circumstances. In fact, you will see figures that prove that the financial stability of the business has grown in the first quarter of 2020. So that is now the introduction to looking into the performance of the first quarter of 2020. We would like to start with the sales figures. And what you can see with the comparison of the quarterly top line results is the usual push that we have in the third and the fourth quarter, where the business grew, coming from levels of EUR 360 million in Q1 and Q2 of 2019 to levels of EUR 380 million to EUR 420 million. The first quarter of 2020 yielded an untypical -- seasonally untypical jump to EUR 440 million, which was partly a result of a demand spike that we were noticing in March. We will go in details on this point. But that was only part of what was going on. We also have made deliberate shift of our attention to retention management. And we also have taken new and very efficient means in marketing efficiency. And that combined led to a sales momentum that was already picking up positively in mid of February. And last, we also have now analyzed for you the figures of April, which also show that we have a continuous level of growth and not that much of a backlash of extra orders coming in in March, resulting in slow sales in April. April clocks in 17% improvement over the year before. And for the first quarter, we have a total of 21% growth compared to last year's first quarter. Behind that is deliberate set of activities that make up for that one glitch that we have seen in 2019 when it comes to sales performance. We've seen a falling trend in the sales retention rate. It went from 93% -- 94% was the total value for 2018. And then it fell to 93%, 92% in the first half of 2019. We stabilized the revenue retention at 91% with a minimal but noticeable upwards trend, but it past the decimal point. And now what we see is that the first quarter really brings us back to the levels of retention rate that are not only the hallmark of our business model but also hallmark and trademark, so to speak, of zooplus activities. So we're back to 94% for the 12-month rolling revenue retention at the end of the first quarter of 2020. So we see that as truly significant news, and that bodes well also for the sales development throughout 2020 and beyond. When we look into the market, we see that all markets are contributing to that positive trend. We see in our, what we still consider home market -- Germany, Austria and Switzerland -- continuous level of growth of now 23%, so slightly above the average of zooplus, although we are operational in that market for 20 years by now. The French market is doing fine. Netherlands, Belgium and Luxembourg is doing fine. We continue to have very strong position in Poland with fast growth and total market share of 14%. We see that the U.K., which is a very competitive market, also delivers 20% of growth and so on. So what we see is that the off-line to online shift is probably gaining a bit momentum because people appreciate -- if given the choice of sales channels, they appreciate even more with the combination of convenience, safety and value for money, and that's what we focus on. The sales success does not come at the expense of gross margin deterioration, quite the opposite. We have established a dedicated team for yield management. In the year 2019, we get more and more authority and span of control over pricing. And the focus on reducing the sales of loss leaders and reducing the amount of margin loss exactly coming through certain pockets of sales, which are well below the average margin, pays off. Overall margins improved by more than 100 basis points. We also see that the sales mix is improving. We push successfully our private label that offers also -- in the perception of the customer -- tremendous value for money, which also produces customer happiness. So the loyalty rate, that went up to 94%, partly also went up because our own brands produce above-average loyalty levels also for the customers. So good news on the margin side. We insist on stating that almost all of the articles we kept stable in pricing towards the customers because that we see as essential for 2 reasons. One thing is we don't want customers to feel as if we're making use of the special situation or the supply and demand squeeze that corona is inducing in some corners of Europe. And we also want to make sure that what we see as inevitable large recession looming -- we're already in a recession that is going to tighten the budgets for consumers. That calls for discipline in pricing. So what we have in margin improvement comes from deliberate refocusing exactly on how we treat the loss leaders. But most parts of the assortment and most parts of the customers experienced completely stable prices. As mentioned already, own brands play a role in the mid- and long-term strategy of zooplus of almost towering significance. We see private label of our own brands has a very good tool both to increase -- with triple good effects: One is, it increases the margin structure; the second effect is that it produces or pays towards loyalty of the customers; and lastly, private label is very important in order to have a certain relative independence of the industry brands. We offer growth opportunities for both sectors of our business, that is the industry brands, but that's also the own brands that we continue to build and improve. And it shows in a growth index that's 1.4 in the first quarter of 2020, so we outperformed the industry brands quite significantly. We have a growth rate of 34%, and we now have sales on an annualized basis that are closer to EUR 300 million and EUR 200 million. We're happy with these results. We will continue to work on that area of strategic competence. Another area of strategic competence is to bond with the customers as good as possible, and that bond is one KPI that kind of says it all. If you bond with the customer, the customers return, and the revenue retention goes up. In order to achieve that, we've been pushing -- beginning with the end of 2019, and with further intensity or increased intensity in the beginning of 2020 -- the 3 main tools for loyalty that work best at zooplus. And the one is, what we call, SaverPlan. So it is, I mean, the opportunity for customers to lock in a permanent discount to their Saver for all orders against a paid membership. So it's equivalent of what Amazon does with Prime. And the KPIs are almost exactly also mirroring what Amazon is achieving with Amazon Prime. We do now 45% of all our sales exactly with people that have been subscribing to the SaverPlan. We've seen significant uplift in sales compared to prior activity of the customer, up to 40% more intensity, and the share of wallet is increasing. And simply also the spend, that is increasing once customers decide to sign up for the SaverPlan. It's a terrific tool and a tool that has been around for quite some time. We gave it a refreshed strategic agenda, and that begins to pay off. Secondly, we have our own in-house loyalty program that is called zooPoints, and that is free for all. So all people that do purchases with zooplus are automatically collecting zooPoints. And they can use the zooPoints against -- they can swap them for products that are usually shipped with their -- with an associated order. So it's both an order starter when collecting the bonus points, but also when using them for rewards. And we also induce extra sales and extra loyalty at zooplus. We see uplift of up to 20% on sales and number of orders of customers that are actively using the bonus points or the zooPoints. The usage rate is fairly high. I would say -- some people would even say extremely high. And given the nature that you don't have to subscribe for it, you would probably think that many people let go their bonus points wasted. But if you look at customers with 4 or more transactions, which have then aggregated a sufficient amount of zooPoints, you have a usage rate that is at around 70%. So it's the loyalty program with the farthest reach into our customer base. And lastly, we see that the zooplus App does not only receive very good reviews by our customers, it also has increased usage. We come with a, let's say, large customer base acquired already, let's say, between 1999 and 2010 and then also large segments between 2010 and 2015. We have -- we come from a customer that has a desktop legacy, but we made a very good shift into the mobile traffic when it comes to acquisition, but also when it comes to usage. And we take that to the next level by now having 14% of all orders done through the zooplus App. That's up by something like 400 basis points because last year -- the year before, we have seen 10% of the orders coming in through mobile app. Logically, we can also track the loyalty of app users, and that is above average and quite significantly. So these are the 3 pillars that are part of the loyalty improvements or revenue retention of 94%. Now let's look into new customer acquisition. The other thing we were unhappy within the year of 2019 was the marketing efficiency. We've been pushing rather broadly and aggressively for new acquisition channels and increased number of new accounts. After the experiences of 2019, we refocused in order to rebalance the customer acquisition cost and the customer lifetime value. The customer lifetime value obviously reacts positively towards the increased revenue retention. The customer acquisition costs are improving also quite significantly. We have almost exactly the same amount of new customers than the quarter-one, year before. So we now have, in both quarters, roughly 750,000 new accounts set up. And we did so in the year of 2020 with significantly less budget. So we are trimming the ad spend without losing the total amount of new customers acquired. People might ask is that good enough for the growth ambition for zooplus. And then it's important to factor in not only the sheer amount of new customer setup -- new account setup, but we also look into the customer quality. And what we see here is 2 early-stage indicators that also show not only that we are more efficient in acquisition, but also better in quality. And the number of new customers that do one -- that do -- much like the sales that they do already indicates for some improvement because we have exactly the same number of new accounts, we have 5% more sales and bigger first-time baskets, positively correlate with the customer lifetime value. So that's the first indicator that we can offer. And even more tellingly, if you don't look into the first transaction itself but into a repeat transaction. For that one, there's very little time. We're looking into the first quarter. So a customer that has been acquired in January probably does one transaction in March, but the customer acquired in March doesn't really have yet the opportunity for a consecutive transaction. Yet we are looking into that early-stage indicator of customer quality, and what we see is that the sales are not in the first transaction but in follow-on transactions of these newly acquired customers is already up by 16%, I mean, over the comparable value for the last year. We're going to track that indicator of customer quality throughout the year, and you see that we are on to a stable trend of better customer acquisition both in efficiency and quality. So now away from sales and marketing, looking into the way we operate the business. We explained in detail already, in the past, the setup of a logistics network that has many fulfillment centers; but in a network, so we can load balance. And we also can make sure that if one country has a spike in orders, or 2 countries, that we spread the load over multiple FCs. We also see that our availability levels benefit from the fact that if certain articles are out of stock in one fulfillment center, we can compensate by delivering using another fulfillment center. It was of very high relevance because March order intake -- and that's real data that you see there in this symbolized screen -- it really spiked quite massively. In mid-March, it spiked to an extent that in March we took in not the usual sales volume of roughly 30 days of worth, but it was more sales worth of 10 extra days. And these 10 extra days, you can't just, say, create extra days for logistics. They have to squeeze this output through their system. And basically, logistics partners did a terrific job at handling all the peak and making sure that all fulfillment centers were fully operational in the midst of confusion and restrictions in the corona crisis. And then we simply see that what customers wanted -- safety of having enough supplies for their beloved pets -- was something that zooplus was able to deliver. A great job by the logistics people. We're not going to go very much into detail on Page 15. We'll more say thanks to all the great partners that we have. One thing is the fulfillment center operation, but we have to say that it is really very, very difficult to organize these days is the last mile delivery. We see that with the shutdown of retail for many, let's say, nonessential categories, we were still pushing the orders into the online sphere, and that cumulative creates quite a bit load also for distribution of the parcels. And having seen how well that essential service works towards keeping customers happy and keeping customers supplied with all their essentials and desired products just proves how strong the combination of Internet and our logistics works to making e-commerce the leading consumer channel across categories and, in particular, in our category. ---------------- Now let's look into the efficiency figures. In March, we still had to be a bit careful about the impact of what we will see coming as cost increases in logistics. We're not completely sure if there is any other hidden or extra costs hitting zooplus for Q1. We can now say that, overall, logistics has improved in cost efficiency, partly driven because the costs per parcel were already declining, in particular, in the first 10 weeks of the quarter. But also, we were able to increase the value per parcel quite significantly. That helped to bring down logistics costs to 18% of revenue. We already mentioned that advertising and marketing has been dialed back by 0.5%. And the only thing I would note is that we've been investing into IT and into strategic projects, which explains a rather one-off effect of significant increase here. IT and administrative and consulting services went from 1.9% of sales to 2.7% of sales. Overall, the cost efficiency has increased, the margin has improved, and that makes it clear what happens. And as a result, the profitability of the business went up. So we have an EBITDA in the first quarter of 2020 of EUR 8.1 million, which compares very favorably to the EUR 2.2 million that we had in the first quarter of 2019. So we now had an EBITDA level of roughly 2%. And that moment is -- we have proof of that in data. We saw that correctly as a triggering event for adjusting the guidance. Before we get to this one, one other financial that is showing impressive performance in the first quarter is the cash flow. And the cash flow from operating activities is more than EUR 40 million, of which we -- I just want to bring that to your attention, EUR 15 million comes from stock decrease. That's the natural effect of these 10 days of extra sales worth that we took in March, and that is explaining why we have, at the end of the period, a rather low level of stock. And even if you deduct that, we remain with EUR 25 million of free cash flow generated that is partly seasonal. But if you compare to last year's figure -- which was around EUR 10 million of cash flow generated in the first quarter -- the EUR 25 million, even if you deduct the stock change, is a significant achievement and pace towards the financial stability and the attractiveness of the business model. Yes, as mentioned before, we've seen consistently good news and successful initiatives of the company rolling in over the last 8 -- 7 to 8 weeks. And that allows and also forces us in a positive way to update the guidance. The numbers are already out there. We see that the sales growth, I mean, in 2020 is going to go up from at least EUR 180 million to EUR 225 million. So that translates also into growth rate that goes up from 12% with the previous guidance into levels of 15% now in -- for the updated guidance for 2020. We also see that the EBITDA guidance that we had to issue in March in the face of, in certain aspects, unclear new situation is now brightening up. And we see at least EUR 20 million of EBITDA doable for the year of 2020. And that update has been issued in May 7. So these are the news that zooplus can provide. We keep on looking at figures, and we're really happy with the achievement of the team, of our partners, of our loyal customers and the management. And we're now happy to take your questions. ================================================================================ Questions and Answers -------------------------------------------------------------------------------- Operator [1] -------------------------------------------------------------------------------- (Operator Instructions) And we'll now take our first question. -------------------------------------------------------------------------------- Volker Bosse, Baader-Helvea Equity Research - Co-Head of Equity Research [2] -------------------------------------------------------------------------------- Volker Bosse, Baader Bank. I have 3 questions. First of all, Cornelius, congratulations on the great set of results. My first question would be regarding the strong gross margin trend we saw in the first quarter. Is that also a good proxy indication for the gross margin in the second quarter and for the full year, would be my first question. And second question is on marketing. You reduced marketing cost and percentage of sales to 2.2%. Is this also a kind of run rate for the full year or how do you look at that? And in that regard also, you stated that you want to focus again on more online marketing. So what is your learning, your experience from last year's more off-line-related marketing campaigns, advertising campaigns, yes? Any learning out of that try last year? And the final question, third question is on the new registered customer growth, 747,000 in Q1 was 1.1% above last year, your view on that. I would have expected a bit more new customer growth, to be honest, given the COVID-19 effect, which seems to be a kind of business accelerator as people shift shopping preferences from off-line to online. So how do you look at this? And what was the new customer growth in April? -------------------------------------------------------------------------------- Cornelius Patt, zooplus AG - Chairman of the Management Board & CEO [3] -------------------------------------------------------------------------------- Okay. Thank you very much for the questions. I go through them one by one in reverse order. First of all, the April figures for new customers, we don't disclose yet. Secondly, when we look into new registered customers, yes, we noticed that we're basically kind of stable with the number of new customers, but that is a direct result of a clear focus on quality. What we've seen throughout 2019 is accounting just the sheer number of accounts and not looking into their likelihood of repurchases, and their long-term sales potential is misleading and is simply not sustainable enough as an indicator when you want to build a long-term top line performance. So we would simply once more mention that the sales of new customers -- the early repeat sales of new customers registered in 2020 first quarter is up by 16%, and that is well beyond what we're planning to achieve. We're, in our plans for 2020, more focusing on a slightly reduced number of new accounts set up but increased total sales value out of that cohort. And what we now see is -- and that's right, that's partly driven by the corona situation -- is a healthy 16% plus that we have with the early follow-on sales into new customers. As mentioned before, I mean, we will keep that KPI available throughout the year. Behind that is a clear learning from 2019 that the push into new marketing channels, and that is mainly off-line, proves not to be efficient at least in our major geographies in which we operate here in Europe. And we also see that the online marketing has, say, nonlinear costs, but in fact you have escalating costs. The more you push, also -- the more you have to accept a fairly high marginal cost for extra customers acquired. And that gives you information that we plan to keep the marketing spend well below the level of 2019, which had a level of 3.3%. And we also see the opportunity to keep it at or slightly below the level of marketing expense that we have seen in the first quarter. So the 2.2% is more in the upper limit [and what we understand]. And probably, there is some opportunity to bring that a notch down in the course of the year. When it comes to the gross margin, on this one, we continue really to monitor the market. We simply want to make sure that the trust of our customers in the stability of our service, into the quality of our service is also completed by the trust that they can have into the value for money or into the pricing aspect of our business. So we plan to keep the gross margin at least at the level of the year before, but we don't have a clear ambition to improve the margin at -- probably at the expense of losing faith of the customer and probably any kind of adverse climate that you would see in levels of consumption in the second -- in particular in the second half of the year. So differently, we see a clear commitment of zooplus management that we will be able to at least keep the margin at the level of the year before, but we're not going to expose ourselves by promising a certain level of margin improvement. We've been scoring well in the first quarter and that was because of professional work done by [the U.S.] management team. And that is the good news we can share for now; the plan for the rest of the year, I just explained it. -------------------------------------------------------------------------------- Operator [4] -------------------------------------------------------------------------------- (Operator Instructions) We'll now take our next question. -------------------------------------------------------------------------------- Alvira Hamid Rao, Barclays Bank PLC, Research Division - Research Analyst [5] -------------------------------------------------------------------------------- It's Alvira here from Barclays. The 94% revenue retention rate is a significant improvement compared to last year. Are you able to help us understand how much of this is due to lower customer churn and how much is due to higher spend per retained customer? And on spend per customer, can you give us some insights into the baskets of legacy customers? Does it look like people are stocking up on pet food or are they adding more accessories and other products to the basket? Any color there would be helpful. And then secondly, I think your guidance for the full year implies revenue growth of 13% for the rest of the year. That feels quite low compared to where we're run-rating now. Is that just conservatism or is there any other reason to expect a significant slowdown in the remainder of the year? And similarly, on profitability, if I take the EUR 20 million EBITDA guidance for the full year, your guidance implies margins of about 1% for the rest of the year, which is lower than what you achieved in Q1, why is that? -------------------------------------------------------------------------------- Cornelius Patt, zooplus AG - Chairman of the Management Board & CEO [6] -------------------------------------------------------------------------------- Yes. Okay. Happy to go through all the points. The first one, very good question about the revenue retention: how much is driven by better loyalty of -- towards the accounts, and how much is driven by more spend per account. And that was exactly also the question we were analyzing because we kind of can then separate out what is better revenue retention management on an account basis -- which we would attribute to the loyalty tools, as explained before -- and how much is extra spend, that is probably largely driven by the COVID situation. And we see the kind of equal parts and slightly more driven by the loyalty tools that the revenue retention has improved, because we improved in both accounts: on account loyalty, roughly -- slightly bigger half of the effect; but also more spend per account. And that we would attribute as probably a transient effect. And that's one of the reasons why we don't think that we are conservative with the guidance, we simply are careful that we promise what we can deliver. And we also have to face this certainty about consumer spend in the second half of the year. Everybody is aware of that. And also, nobody knows what there is going to be further surprises that the year of 2020 holds for us when it comes to business climate and while we can operate our logistics system in all corners of Europe. I mean we simply want to be minimally reserved because we can't project, after one very strong quarter, to really continue to deliver on that fantastic level because customers also need to have the economic funds for that. When we look into the baskets that have been increasing, we see that the first couple of days of corona demand spike were largely driven by food, whereas the more we've seen protected shutdown and people forced to sit at home, we also saw accessory sales picking up. And that's probably also quite logical because you spend more time at home, you spend more time with your pet, and then you probably also consider doing a little bit for the accessories that you and your cat, your dog have available. So that answers for the question. We've seen food-driven first demand spike, and now we see a slight uptick in accessories. But then accessories account for no more than 15% of our total sales. It is slightly below that. And so it's not as significant as the food business. With the earnings, I can only repeat what we also say about the top line guidance. The second half of the year is going to be an economic climate which is different from what we've seen in the past. It also will be challenging for the off-liners to make up for lost sales. We see probably increased levels of competition. And at times also kind of desperate and expensive attempt of off-liners to buy back a bit of sales. This is why we will stick to the guidance of -- for 2020 of EUR 225 million of growth, which would take total sales to EUR 1.75 billion. And then also, we confirm that we expect at least EUR 20 million EBITDA. -------------------------------------------------------------------------------- Operator [7] -------------------------------------------------------------------------------- (Operator Instructions) We'll take our next question. -------------------------------------------------------------------------------- Clara Kamenicek, MainFirst Bank AG, Research Division - Analyst [8] -------------------------------------------------------------------------------- This is Clara Kamenicek from MainFirst Bank. I have 2 questions. Could you maybe elaborate a bit on what is the retention rate among the private labels because they seem to be a significant driver behind the gross margin development? So could we also expect this level to continue beyond the COVID-19 situation and -- yes, as to how sustainable is the increase in the gross margin in the long term? And my second question is, in the beginning, you were quite careful with your guidance because you've feared that there would be some stockpiling which could come at the expense of sales in H2. What do you think about that now? -------------------------------------------------------------------------------- Cornelius Patt, zooplus AG - Chairman of the Management Board & CEO [9] -------------------------------------------------------------------------------- Yes. Well, let me do the private label question because, first, the revenue retention is roughly 94% for private label. We'll more look at revenue retention of 96% that we have there. It's a bit of a fuzzy logic because customers are not only buying private label or only buying industry brands, so there's quite a bit of hybrid consumption. It's a bit difficult where to draw the line between private label customers and industry brand customers. But as a guidance, we can give you the information that instead of 94%, we're more looking at 96% revenue retention. That might sound like just a small uptick, but if you look at the reverse way, with our standard business, we now lock in 94% and lose 6% of our sales per annum. That's still a fantastic customer lifetime value that you can derive from that. But with private label, that loss of sales per annum shrinks from 6% to 4%, and that we see as significant -- not that the short-term impact, but for the mid- and long-term impact. And the same is also true for the margin in private label. And it's something where you need basically years and years and probably decades to build that business. But eventually, it makes it very, very strong both in top line and in the financial attractiveness of the business model. When we look into the sales figures, and that led in -- led to the situation that we were updating the guidance on the 7th of May because not only at that point in time we had extra information availability -- available on the profitability, the margin situation, the cost management and logistics, the marketing efficiency, but also we've been looking into the April figures. And we were preparing, to be honest, for a bit more of a slump of demand in April after having seen such a strong demand in March. So -- and that led to the fact, I would say, we're now more confident that we not only clock in sales earlier than before, but we clock in extra sales. And we also build relationships with customers that are more stable and will deliver more predictable future returns or future sales. Putting that together, I would say, by the -- halfway through the year, let's say, including the sales figures of June, we can probably also look a lot clearer once again into the full year top line guidance. But I'm kind of repeating myself, unless we have more data points, we can't update the guidance for the top line because we see that some of the demand is front of the demand. And we see that there might be real issues with keeping this fantastic sales level in the second half of the year due to consumers tightening their budgets. It's as simple as that. So give us more time and also to read the data. And we can't just -- almost -- not even halfway into the second quarter. We can't give you any projection on the second quarter sales. Can't do that. -------------------------------------------------------------------------------- Operator [10] -------------------------------------------------------------------------------- (Operator Instructions) We have no further questions. I'd like to turn the call back over to you for any additional or closing remarks, sir. Thank you. -------------------------------------------------------------------------------- Cornelius Patt, zooplus AG - Chairman of the Management Board & CEO [11] -------------------------------------------------------------------------------- Yes. Thank you very much for attending the call. Thank you very much for the questions. Thank you very much also for being a bit patient why we can't really predict everything for the full year. We hope that you found the information provided helpful. And we also assume that you can go along with our updated guidance and see that as a proof of how well zooplus is managing the year of 2020. Thank you very much, and hear you again after the second quarter for the discussion for the first half year in a couple of months. Thank you very much. -------------------------------------------------------------------------------- Operator [12] -------------------------------------------------------------------------------- Ladies and gentlemen, that concludes today's conference call. Thank you for your participation. You may now disconnect.