Q4 2023 Lands End Inc Earnings Call

Participants

Bernie McCraken; CFO; Lands' End, Inc.

Andrew McLean; CEO; Lands' End, Inc.

Josh Herrity; Analyst; Telsey Advisory Group LLC

Eric Beder; Analyst; Small Cap Consumer Research LLC

Alex Furhman; Analyst; Craig-Hallum Capital Group LLC

Presentation

Operator

Good day, and welcome to the Lands' End fourth-quarter earnings conference call. (Operator instructions) Please note today's call will be recorded, and I will be standing by if you should need any assistance.
It is now my pleasure to turn the call over to Bernie McCracken, Lands' End's Chief Financial Officer. Please go ahead.

Bernie McCraken

Good morning, and thank you for joining the Lands' End earnings call for a discussion of our fourth-quarter and fiscal 2023 results, which we released this morning and can be found at our website, landsend.com. I'm Bernie McCracken, Lands' End Chief Financial Officer, and I'm pleased to join you today with Andrew McLean, our Chief Executive Officer.
After the prepared remarks, we will conduct a question-and-answer session. Please also note that the information we're about to discuss includes forward-looking statements. Such statements involve risks and uncertainties. The company's actual results could differ materially from those discussed on this call. Factors that could contribute to such differences include, but are not limited to those items noted and included in the company's SEC filings, including our annual report on Form 10-K and quarterly reports on Form 10-Q.
The forward-looking information that is provided by the company on this call represents the company's outlook as of today, and we do not undertake any obligation to update forward-looking statements made by us. Subsequent events and developments may cause the company's outlook to change.
During this call, we'll be referring to non-GAAP measures. These non-GAAP measures are not prepared in accordance with generally accepted accounting principles, a reconciliation of non-GAAP financial measures to the most directly comparable GAAP measures can be found in our earnings release issued earlier today, a copy of which is posted in the Investor Relations section of our website at landsend.com.
With that, I will turn the call over to Andrew.

Andrew McLean

Thanks, Bernie. Good morning, and thank you for joining us today. Our results for the fourth-quarter and full-year 2023 reflect the continued execution of Lands' End value-creation strategy. We delivered strong performance in the fourth quarter, including throughout the holiday season, closing a fiscal year where we generated positive momentum across the organization and drove increased profitability. Our deliberate efforts to generate more profitable sales continued to deliver from Q4 and resulted in a 14% increase in gross profit dollars, adjusted EBITDA of approximately $32 million, which was above the high end of our guidance range and gross margin expansion of approximately 550 basis points. Q4 marked our fourth consecutive quarter of significant inventory improvement, with inventory down 29% year over year. In the quarter, we were able to be nimble and disciplined throughout the holiday season, prioritizing newness during what is a highly promotional period for our industry.
Looking ahead, we remain focused on further improving our inventory return from the speed and efficiency initiatives we are implementing across our supply chain as a solutions oriented business. We are deepening our focus on building the brand to best align our assortment with customer shopping behaviors. We're bringing our two key customer cohorts, revolvers and revolvers, the items they love and are looking for while introducing freshness across our assortment more frequently throughout the year via new styles, colors and fabrics. We're doing so with more full-price selling, lower levels of clearance sales and less promotional activity.
Our authority in Outdoor Solutions was a key driver of our strong margin performance in the fourth quarter, both in the US and internationally. As discussed last quarter, we reduced our investment in heavy outerwear and moved towards lighter fabrics and materials. Our Wonderware offering of middleweight PacketCable jackets performed exceptionally well as a transitional outerwear solution ideal for layering. We are weather pushing our assortment and using this offering to extend the outerwear buying season across our digital channels.
We're creating more compelling and more personal customer journeys, which is driving increased traffic and engagement from new and existing customers with social media working particularly well, as we've said, before, we're taking a more outfit centric approach to our assortments that feature significantly more productive inventory and facilitates demand across natural adjacencies.
Our success in outerwear help facilitate sales of layering products effectively supporting the new seasonal launches of our women's tops and bottoms businesses. Sweaters had a wonderful season with the customer migrating to new silhouettes, but our quarter is that director sweater hitting a trend that was easy for all our customer cohorts to lean in and tying back to our Suprema luxury T. program, another of our brand USPs or unique selling points launches of new age and size, appropriate jeans and chinos incorporating solutions for heat and comfort.
I've been additional strengths for us with our boyfriend Jean, bringing an unrivaled level of comfort and fit. While our stripes Chino pant sold through in days, which helped to deliver a message to our customer, don't wait for the discounts or your miss that our performance across our swim and vacation solutions was also encouraging. We continue to introduce newness across our swim categories, including new colors and textures, which customers responded well to throughout the full year it is notable in swim that we are building on the successes of our franchise products calculus for 40 years.
Our go-to swimsuit expanded its footprint this year, adding new products including a cross back strap and attached or fabrications. This innovation leveraging existing brand franchises is part of our plan to maintain our authority as a leading swim brand in America before I turn to performance in our various businesses. Beginning in Q1, we expect to change the way we talk about our performance. It's been more consistent with the evolution of our brand B to C comprises our North American and international businesses serving consumers across a number of channels, while B2B comprises our school uniform business uniforms, first, of course, more to come on this next quarter.
Our U.S. e-commerce business, our largest B2C channel, delivered a third consecutive quarter of great margin performance with an increase in gross margin of approximately 520 basis points year over year due to our more targeted approach to promotions, driving higher-quality sales and improved inventory management. As we've discussed before, we continue to maximize key events and holidays to drive demand following record performance through the Black Friday Cyber Monday period. We leveraged our data throughout the holiday season to adapt our assortment in real time based on how our customers were responding. This aligns with our broader strategy of putting inventory to work by taking a more outfit centric approach that exploits category selling across natural adjacencies.
Moving to our third-party business. We found continued success in our balanced approach towards working with a handful of like-minded partners that share our vision for customer-focused solutions. It resulted in a low single digit improvement in revenues, coupled with gross profit dollars increasing by over 50%. Our new exclusive swim product in 200 Target doors is performing well and our focus on assortments tiered to the individual marketplace. They liked it our customer and created both the engagement and journey between channels that we believe amplifies the opportunity as our product and own channels evolve. We are seeing that behavior and positioning improve within our marketplaces.
Speaking to the value we place on managing personalized customer journey, we continued to execute on our licensing strategy, which adds asset-light recurring income streams while allowing us to continue to focus on our core capabilities.
As we said on our last call, we expect to begin seeing royalties in 2024 from our recent licensing agreements for club stores, primarily Costco, kids' categories and footwear. Moving forward, we have a belief that expansion into existing and whitespace product channel and geographic licenses can increase the reach of our brand, finding the customer when they want to shop where they want to shop and amplify performance across the entire brand footprint.
Turning to our international business, we are pleased with how our performance in Europe is trending and firmly believe that the business has stabilized. Like in the US, we continue to prioritize assortment, newness and better inventory management with a focus on protecting margin through lower levels of promotional activity, while revenue was down 6% year over year.
In Europe, the business increased gross profit dollars by 24% and expanded gross margin by over 1,000 basis points year over year. We were also pleased to see early success in our efforts in Europe to unlock speed and innovation to deliver our customers. The best product quality and service were leveraging new global sourcing capabilities, including with partners like Li & Fung to more quickly respond to customer needs and supplement our assortment with market goods, including festive styles like fashion skirts that were in demand during the holiday season, while testing new outerwear silhouettes. Like how long is your labor?
Turning to our B2B Outfitters business. We saw nice performance during the quarter as our efforts to deepen the new customer funnel began to bear fruit, resulting in the launch of new partnerships and continued progress in our school uniform business, we're seeing an encouraging trend upward for the business. Our customer service and can-do attitude, coupled with our highly recognizable brand DNA, set us apart in this space. Over the last year, we deepened relationships with new and prospective customers. We accomplished this through restructured sales and service organizations that place decision making closer to the customer and supported it with rigorous feedback processes to ensure that voice was heard and acted upon. Ultimately, we took it upon ourselves to make 2023 about Chris on-point execution receiving by way of example, an A-plus grade on our school uniforms business from decision makers across the country. We will continue this focus into 2024 as an underlying business USP simultaneously, our restructured high-performance sales and business development teams are building a robust pipeline of opportunities, implementing initiatives to support leadership in service and technology and providing future upside to the business. Internally, we are pleased with the book of recurring business being generated both in time and in volume.
To summarize the quarter and year, we made tremendous progress on our strategy and put Lands' End in a great position to build on our successes in the years ahead. I'm confident that by continuing to extend our leadership as the solutions provider of choice, we'll be able to drive enhanced value for our customers, employees, shareholders and other stakeholders over the long term.
Bernie will now discuss our fourth-quarter performance as well as our 2024 guidance.

Bernie McCraken

Thank you, Andrew. For the fourth quarter, total revenue came in at the high end of our guidance range at $515 million, a decrease of 3% compared to last year or approximately flat when adjusting for the 2022 closure of our Japan e-commerce business and the conclusion of our work with Delta in early 2023 gross profit dollars increased by 14% and gross margin improved by 550 basis points compared to a year ago. This efficiency drove a 31% increase in adjusted EBITDA and a 160 basis point improvement in adjusted EBITDA margin versus 2022 and above the high end of our guidance.
Global e-commerce revenue was $405 million in the fourth quarter, a decrease of 2% compared to last year and approximately flat when adjusted for the Japan e-commerce closure, which generated $7 million in 2022 compared to the fourth quarter of fiscal 2022, US e-commerce was flat and Europe e-commerce decreased 6%. Outfitters revenue for the fourth quarter was $54 million, a decrease of 11% compared to last year. Excluding the $5 million difference in year-over-year revenue from Delta, the Outfitters business was down 3% in the quarter revenue for our third party business increased 3% in the fourth quarter, driven by the relatively strong performance across our more online marketplaces. We also increased gross profit dollars by over 50% and gross margin by over 1,300 basis points as a result of our tailored marketplace assortment strategies.
Gross margin in the fourth quarter was 38% or approximately 550 basis point improvement from the fourth quarter of 2022. The margin improvement was driven by the new products across the assortment strength introduced ship transitional outerwear and adjacent product categories, reduction in sales of clearance inventory and improvement in supply chain costs. We delivered adjusted EBITDA of $32 million in the fourth quarter, up 31% year over year, which was slightly above the high end of our guidance range. Our net loss for the quarter was $9 million or $0.27 per share. Our adjusted net income for the quarter was $8 million or $0.25 per share.
Turning to our balance sheet, in December, we successfully completed a refinancing of our existing term loan well ahead of its maturity in September 2025 and entered into a new term loan of $260 million that matures in December 2028. The completion of this refinancing initiative was an important step in Lands' End trajectory and provides us with more favorable terms under which we continue to invest in the strategic growth and evolution of the company. Inventories at the end of the fourth quarter were $302 million compared to $426 million a year ago, representing a 29% and proved proven during the quarter. As Andrew said earlier, Q4 marked our fourth consecutive quarter of inventory improvement, and we averaged a 25% reduction every quarter of our 2023 fiscal year. This was a result of the actions that company has taken to improve inventory efficiency by reducing purchases and capitalizing on speed-to-market initiatives.
Now let me touch on a few performance highlights for the 2023 fiscal year. Gross margin for the year increased approximately 430 basis points to 43% compared to 38% in fiscal 2022, driven by significant expansion primarily in the back half of the year.
Adjusted EBITDA for fiscal year 2023 was $84 million, slightly above the high end of our guidance compared to $71 million in fiscal 2022. These results reflect our continued effort efforts to prioritize higher quality sales and balance sheet efficiency which has continued to expand our profit margins across our business units to demonstrate the power of our new approach versus focusing primarily on revenue. We brought in an additional $0.17 of profit for every dollar of lower revenue versus last year. We're confident that as we return to revenue growth, we'll be able to build on our success by continuing to prioritize and drive quality profitable sales.
For the fiscal year, we had a net loss of $131 million or $4.9 per share. We had an adjusted net loss of $5 million or $0.15 per share, which excludes the $107 million impairment of goodwill in the third quarter due to the decline of our stock price and resulting market capitalization as well as other significant items. In the fourth quarter, SG&A was 34% of net revenue, an increase of 510 basis points compared to the fourth quarter of 2022. For the full year, SG&A increased $23 million to $550 million or 37% of net revenue compared to $527 million or 34% of net revenue in fiscal 2022. The 350 basis point increase was driven by deleverage from lower revenues and higher incentive base personnel costs.
After a comprehensive review of our organizational structure, we executed a high single digit percent reduction in corporate headcount. In January, we determined that creating a flatter, more agile organization would set us up to continue to profitably grow over the long term while generating additional cost savings that can be reinvested in the business This reduction, combined with earlier changes in our sourcing organization constitute a total reduction of approximately 10% of our corporate headcount. These organizational changes reflect the new narrative Our teams around how we think about the skills, strategies and requirements to grow our business in the future.
During fiscal 2023, we returned to 12 million of cash to shareholders in the form of approximately 1.5 million shares repurchased, including 2 million in the fourth quarter. Under the Board's previous authorization, we repurchased 2.3 million shares for an aggregate 20 million. As announced earlier this month, the Board of Directors has authorized a new 25 million share repurchase program set to run through March 2026.
Now, moving to guidance. We are continuing to prioritize high-quality sales and improved cash flows, which we expect to drive continued gross profit and margin expansion during the spring summer selling season. As a reminder, Q1 2023 included the conclusion of the Delta contract, which positively impacted our revenue by over $25 million and approximately $12 million in adjusted EBITDA in the first quarter, we expect net revenue to be between $255 million to $285 million with gross merchandise value or GMV expected to be low to middle single single digit growth.
We believe GMV, which accounts for all merchandise sold to customers through B2C and B2B channels, as well as the retail value of the merchandise sold through third party channels is an important indicator of the performance of the comparable growth of our businesses. We expect an adjusted net loss of $9.5 million to $7.5 million and adjusted diluted loss per share to be between $0.3 and $0.24. We expect adjusted EBITDA to be in the range of $9 million to $11 million for the full year, we expect net revenue of $1.33 billion to $1.45 billion. While GMV is expected to be low to middle-single digit growth, we expect adjusted net income of $3 million to $12 million and adjusted diluted earnings per share of $0.1 to $0.38. We expect adjusted EBITDA to be in the range of $84 million to $96 million, and our guidance for the full year incorporates approximately $30 million in capital expenditures. As we have discussed, we expect our improved inventory management to enable us to maintain inventory at normalized levels and bolster our work to further expand gross margin moving forward.
With that, I will turn the call back over to Andrew.

Andrew McLean

Thanks, Bernie, our fourth-quarter results demonstrate the continued success of our strategy and our performance throughout 2023, which has been characterized by steady improvements in our operating and financial position. Paving the way for sustainable, profitable growth.
Before we open the floor to questions, I'd like to touch on innovation. Lands' End has always been at the forefront of innovation. We delivered the first one 800 number service and we were one of the first Internet retailers. Specifically, as I touched on, we are returning to in 2024. Innovation can come from anywhere in the business and alongside some of the AI-driven tools that we are applying to our uniforms business.
I wanted to highlight our sourcing and product teams who recently applied to patent a new wave, our body sculpting swimsuit technology solution through constant customer. First curiosity and the belief that we can amplify our solutions competence. These teams continue to set Lands' End and iconic American brands apart and ready for life's every journey.
As we look to 2024 and beyond. I am confident we have the right team and the right strategy to enable our ability to build on our progress to create value for our stakeholders over the long term.
That concludes our prepared remarks. We look forward to your questions.

Question and Answer Session

Operator

(Operator instructions) Josh Herrity, Telsey Advisory Group.

Josh Herrity

Hi, good morning. I just wanted to follow up here on the gross margin performance continues to be impressive in the fourth quarter. Of that 550 basis point improvement. How much how much should we think about is driven by full price selling and better assortment in response to that assortment and how much is more external factors on supply chain and freight, et cetera. And then as we think about FY 24, what do you see as the gross margin opportunities in the year ahead? And then I guess as perhaps a corollary to that, how should we think about the shaping of the new licensing businesses flowing through the P&L as the year progresses and how that shapes the top line and the margins as well?

Bernie McCraken

It would be fair for 40, Josh?
Yes, I think the gross margin from from of Q4, what you'll find is we talked about in the first half of the year that it was a lot of our gross margin improvement was driven by supply chain benefits, mostly inbound freight. What you'll find as we move through the year, though, we really improved our product and our discounting came way down. So when you break down Q4, it is much less about supply chain savings. We did, as we've talked all year, we focused on our supply chain improvements that we can make there. So we did see some benefit of lower product costs, but predominantly most of that 550 basis points is driven by newness in our product and selling more full-price products and just lower discounting when we did promote.
As far as looking forward, all of the work that we have done on creating a more efficient supply chain. That benefit because it is usually a year out starts to really drive a difference in 2024. So you will see lower product costs driven by those efficiencies to support the business going forward, along with a lot more newness and hopefully as we can driving more full product for full-price sales for our products.
As far as the licensing goes.
As you can see in our guidance, our revenues are down. That is driven by licensing our kids and shoes businesses, which is why we've now started to provide gross merchandise value as a as a as a KPI. so that we can show that the overall brand is growing. And as we guided, it's low single digits to mid-single single digits. And as we've tried to keep pounding on, we are driving higher gross profit dollars. And that's what we expect to see every quarter this year is to drive higher gross profit dollars. Of course, Q1, we are up against that challenge of Delta and the completion of that contract. So excluding Delta, we will drive higher gross profit dollars in Q1 and for the rest of the year.

Josh Herrity

That's helpful. Thank you.

Operator

Eric Beder, Small Cap Consumer Research.

Eric Beder

Hi. Can you talk a little bit about the marketplaces on a is there potential to add other marketplaces to the business? And B, how are you seeing the returns as you start to segment. You've previously talked about you can now shift product between the different marketplaces. What are the opportunities there in terms of margin?

Andrew McLean

Yes, morning, Eric, it's Andrew. It's a great question. And with the flip the marketplaces, it's worth remembering, I just know I just noticed on every call as the 30 that we have a single inventory for the marketplaces and our dot-com site, and we're able to switch between channels and fulfill from that single inventory. So there's a lot of efficiency that's baked into it we're not shipping to someone else's distribution center and having the inventory there, but be contingent. So with the marketplaces, we see opportunity and we talked about I talked specifically about like-minded partners on the call. We're in process of adding on a couple of elevated partners. There's one we're hoping to talk about in the next few months. And I think at the same time. It's about continuing to work with the partners we've got. We particularly look at Macy's and target and opportunities to grow our business there. And I think it's a it's horses for courses. I don't know if that's an American expression, but it's the notion that we want to get optimized on the assortments for each of those. So there's a slightly different price point. There's a slightly different customer relationship and have a different customer journey that happens on each of those marketplaces. So we tend to look at them in isolation and it's not just price point related to the product related, and that's something that we continue to find to. We have some fairly sophisticated tools we're able to apply against that in terms of the returns rate question, you know, we had had higher returns with one of our partners in the past. We've worked through that. And overall, we've been lowering the returns as a consequence of how we put that merchandise mix out there is it we want it to be returns are never where we want them to be in the business. I don't think there's any retail. I can say that, but we've certainly worked our way through it and we continue to look at it at. I think if you want to walk away from this site. We continue to see marketplaces as an important journey and something that we'll continue to build and used to elevate our brand and expanded our brand journeys. Our customer journey.

Bernie McCraken

And Eric, the only thing I'd add to that is from a true of performance, all of our marketplaces raise their gross margin rates over the last year.
It generated a nice total gross margin input for the for the whole company?
Well, I'd say a little bit of related question. So you talked about controlling the inventory and heavier in Europe warehouse mail to ship it. How does licensing flow through that? How do you control the licensing product and how they show themselves and how the product goes through as you expand the categories and other pieces here with Vignette again, great questions.
With licensing. You have to control your brand. I mean, that's really important. The units you'd find like-minded partners. I think that with a lot of years of licensing experience are behind me. If you go out and find a partner who necessarily offers the best rates, you don't necessarily get the best bigger brands, and it's not great in the long term. So you have to find someone to like-minded. The 1st year of that arrangement tends to be about 18 months long and you use the first six months to really build a brand book and get a meshing of the DNA. So fully baked between your brand and the partner. And then ultimately, you're right in control over that. So we have control over the assortments and with rights of approval and increasingly and specifically for categories like swim, it's our product, we design it and it's a 10 pack that the partner will then produce to our standards. So a lot of control goes into that because you're building something for the long term, a best that's how I look at it, it's how we look at it as a business. And it tends to run maybe a little slower on starter homes by 18 months first year, but really it's the right way to do it. And it does something long lasting and enduring.
And from a more tactical or execution side, the interesting thing for the licenses that we'll provide, especially the kids and the shoes licenses will be two aspects to that license. Our partners are going to sell on our website also, and they will put they will put that product in our warehouses to be sold to our customers in the same bags and boxes that they receive other Lands' End product. But then those partners will also be going out to third parties and performing wholesale and sales that we will then make a royalty on right on.

Eric Beder

And last question on inventories, you've done an incredible job reducing the amount of inventories, how should we be thinking about a what is ideal? And B, what should we be thinking about inventory levels into 2024?
Thank you.

Andrew McLean

Yes, I think the key here is some we do have an ideal number and we do want to drive higher turns and we're looking to turn in a couple of years that our full turn faster than we do today. But this really comes from our ability to improve our supply chain so that we can shorten the length of time that it takes for us to receive products so that we can make later decisions and have more newness in our assortment and carry less inventory and be able to be faster in replenishment. So that will take some time yet, but we are definitely going to continue to reduce inventories and drive more newness and turn in our business over the next year.
Yes, I don't know if you caught it in the call, Eric, by far, but draw your attention in fact to it, we're using we used our European business, a lot of test concepts, and they have been and they've been incredibly open minded to this one of the concepts we test so that you can fill later in the season and that gives you speed be guaranteed in terms of the gross margin that it delivers. You want to take the business in future years, and that's something we're going to lean in and do more of we're starting to do that in our U.S. business. And that will be an incredibly powerful element that we bring to bear in terms of what we bring to market and when we bring to market matching against the journey that our customers are on and our expectation at that moment.

Eric Beder

Okay. Congrats, and good luck for 2024 a center.

Operator

Alex Fuhrman, Craig-Hallum Capital Group.

Alex Furhman

Great. Thanks, guys, for taking my question and congratulations on everything you guys have accomplished in 2023 and so far this year. I was wondering if I could ask a little bit about the licensing business as well. Just thinking about your outlook for the full year of a low to mid-single-digit increase in GST. Is that more or less consistent with what you're expecting to see in footwear and kids? Or should those categories perhaps accelerate more overtime in future years as your licensees start to explore other channels for those categories?

Andrew McLean

They Alex, as it goes back to, I think we're going to accelerate that, Alex, we stepped into it with that. Let's review why we stepped into licenses to be one that is obviously asset-light. And as always, it's a great driver.
Our return on invested capital. We're a $1 billion company and we are an iconic American brand that covers both family variety in retail. We can't be as good as we want to be and everything at a CAD1.5 this by doing licensing this allows us to concentrate our efforts on our best assets and the solutions business that we see out there that we really wanted to lean into swim and outerwear and women's and men's. And in doing that, we were able to accelerate those. We took the pressure off ourselves with kids and shoes by going to a partner who is experienced and knows and has the bandwidth to really build them the way we want to build them. And we've always envisioned envisions. I'm not going to get that word that, Bob, we see tremendous growth opportunity. And that's the whole part that underpins this, which is we starting relatively conservatively this year, but we see room to expand those licenses because they won't just be on our website, there will be points of distribution throughout wholesale. I think that also has an added advantage of creating a physical manifestation of our brand. The increase of circularity between the wholesale channel, the licensee and driving customers on their journey back to our website. So a lot of opportunity in there.

Alex Furhman

Great. That's really helpful. Thanks, Andrew. And then you talked a little bit about what your lighting business might look like in the club channel? I imagine that would be across other categories beyond just the footwear and children.

Andrew McLean

Yes. I mean, more and more in the core in the club channel with everything. And I think that just sounds like there's going to be a lot in the club channel. We're really controlling that very tightly and you know, clubs fits like it tends to be they get behind a few items that they get behind them really heavily. And that's a great place to be and actually, I want to talk about the customer here. The customer you reach in the club channel. It's very much a customer.
We're interested in getting it fits our very much our traditional resolver, but we see we have over customer who tends to skew a bit younger as well. And that has us reaching an older millennial and Gen X customer who tend to be very much in there and upwardly mobile. So by having a narrow but deep assortment that continually changes with the clubs that we control, we think we can reach new customers and really drive that drive the business in a way that accelerates all our channels.

Alex Furhman

Great. That's really helpful. Thank you very much.

Andrew McLean

No worries.

Operator

Thank you, lot. This will conclude today's Lands' End fourth-quarter earnings conference call. We thank you for your participation. You may disconnect your line at this time and have a wonderful day.