Ladies and gentlemen, thank you for standing by, welcome to the RH fourth quarter 2020 conference call. At this time, all participants are in listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press star one on your telephone. As a reminder, today's call is being recorded. I would now like to turn the call over to your host, Ms. Allison Malkin of ICR. Thank you. Good afternoon, everyone. Thank you for joining us for our fourth quarter and fiscal year 2020 Q&A conference call. Joining me today are Gary Friedman, Chairman and CEO, and Jack Preston, CFO. Before we start, I would like to remind you of our legal disclaimer that we will make certain statements today that are forward-looking within the meaning of the federal securities laws, including statements about the outlook of our business and other matters referenced in our press release issued today. These forward-looking statements involve a number of risks and uncertainties that could cause actual results to differ materially. Please refer to our SEC filings as well as our press release issued today for a more detailed description of the risk factors that may affect our results. Please also note that these forward-looking statements reflect our opinion only as of the date of this call, and we undertake no obligation to revise or publicly release the results of any revision to these forward-looking statements in light of new information or future events. Also, during this call, we may discuss non-GAAP financial measures, which adjust our GAAP results to eliminate the impact of certain items. You will find additional information regarding these non-GAAP financial measures and a reconciliation of these non-GAAP to GAAP measures in today's financial results press release. A live broadcast of this call is also available on the investor relations section of our website at ir.rh.com. With that, I'll turn the call over to Gary for opening remarks. Great. Thank you. Good afternoon, everyone, and thank you for joining us. We're going to try a different format for this call. It's been recommended to us that many of you sometimes are scrambling and don't necessarily get a chance to read the letter before the call starts, since there's only an hour between we put out the release and we've had a suggestion to start with the letter and read the letter, and then that way everybody's grounded in what we just said, and it might just elevate and improve the quality of the dialogue as we go forward. I'm going to start with reading the shareholder letter that we just released. To our people, partners, and shareholders. As we anniversary what has been one of the most difficult years in recent history, as we begin to see the light at the end of the dark tunnel of this deadly and disruptive virus, we do so with a greater appreciation for our freedom and the simple gestures in life, like a handshake or a hug. We also turn this corner knowing that we used our time wisely to reimagine and reinvent ourselves once again. In times of turmoil, humans tend to move in herds, hunkering down and finding comfort in conformity. Even those who analyze and report the news seem to find reassurance in replication, trying to fit everything into a predictable pandemic piles of headlines we've all been reading. We, for example, have been put into the "there's no place like home" pile. Others have been placed into the "e-commerce is everything" pile. Both are actually good piles because if you're in one of those, you are looked upon favorably, whether you're on the top or the bottom of the pile. I believe many on Wall Street are managing their portfolios in piles, looking through their reading glasses when they really need a microscope and a telescope. A microscope to search for the details and differences in those rare brands and businesses who belong anywhere but the pile, and a telescope to see the opportunities that they will exploit post this pandemic. Since we, the people of Team RH, generally move in the opposite direction of the herd, are allergic to hunkering down, and surely don't believe we belong in the pandemic pile, we've taken a shot at four simple headlines that require neither a microscope nor a telescope. The four P's that give you an insight into what you might expect us to do next. While most of the world spent this past year sheltering in place, we've spent the time reimagining and reinventing ourselves at a never-before-seen pace. Let me talk about these four P's, our product, our performance, our prospects, and our people. Our product. We are building the most comprehensive and compelling collection of luxury home furnishings in the world. The desirability and exclusivity of our product, amplified in our inspiring spaces, has enabled us to gain significant market share with RH Core demand up 36% in the fourth quarter. Our demand has accelerated sharply with February up 73% and the first two weeks of March up 96% prior to cycling the closing of our Galleries, Restaurants, and Outlets a year ago. Adjusted gross margin increased 480 basis points in the quarter, 540 basis points for the year, and 1,210 basis points on a three-year basis versus fiscal 2017, again, demonstrating the desirability of our exclusive offering and the pricing power of our brand. The strategic separation we've created will continue to grow as we further elevate and expand the RH Brand with the introductions of RH Contemporary in 2021, plus RH Color, RH Couture, and RH Bespoke over the next several years. Additionally, our plan is to unveil the World of RH, a digital portal presenting our products, places, services, and spaces this fall. We will begin to bring the different parts of our integrated ecosystem to life with rich content that we would believe will enhance our brand and connect with our clients on a much deeper level. Our performance. We continue to build the most productive operating platform and business model in our industry, with adjusted operating margins increasing 750 basis points to 21.8% versus 14.3% last year on only an 8% revenue growth. Let me say that again, 750 basis points on only 8% revenue growth. It's an operating margin never seen before in the furniture home furnishings market and more than 50% better than the closest competitor. Our ROIC of 53% in 2020 also puts us in a class of our own. Our results represent a systemic lift that is not merely a temporal pandemic shift due to an unsustainable revenue gain. Remember, virtually 100% of our Core business is direct to customer, with less than 1/10 of 1% being cash and carry from our stores, which is basically floor model sell-offs at the end of a season. That is why our demand to revenue lag is much greater than other home furnishings retailers who have seasonal assortments and large cash and carry businesses. It is also important to note that due to the virus-induced supply chain disruptions, approximately $150 million of demand that was generated in 2020 will be recognized as revenue in 2021. The majority of the selling cost to generate that demand was absorbed in 2020. If those revenues were recognized last year, our adjusted operating margin would have reached 23%. I often quote Bernard Arnault, the Chairman and CEO of LVMH, as he says, "Luxury goods are the only area in which it is possible to make luxury margins." At 21.8% adjusted operating margin in 2020, RH has now eclipsed the operating margin of LVMH, and we have a clear line of sight to 25%+ operating margin over the next several years. With less than $3 billion of net revenues, you can imagine the leverage we should experience as we scale. RH has also become one of the top-performing consumer stocks for the past decade. Since our IPO on November 2nd, 2012 at $24 per share, RH has outperformed Apple, Amazon, Google, Facebook, Nike, Starbucks, LVMH, Home Depot, Hermès, and just about everyone else but Tesla. Warren Buffett says, "Time favors the well-managed company." We believe our performance has and will continue to prove that point. Let me move to our prospects. We ended 2020 with just less than $3 billion in net revenues and believe the data supports the RH brand reaching $5 billion-$6 billion in North America and $20 billion-$25 billion globally. We believe that number will continue to grow when you consider our opportunities in Hospitality and Home building as we continue to expand the RH Ecosystem with the introduction of RH Guesthouses and RH Residences. We are tracking to begin our international expansion in Europe with the opening of RH England and RH Paris in 2022. We are planning to open our first Guest house in New York City this fall, followed by our second Guest house in Aspen, which will include our first RH Bath House & Spa in the fall of 2022. We are currently in design development for our first RH Residences as part of our larger Aspen ecosystem and have already received multiple unsolicited proposals to purchase our homes sight unseen or to place deposits and reserve a home. We haven't put anything out there. We've said nothing but put out the original press release, and we probably could pre-sell every single home today. We believe the revolutionary design of both the Guesthouses and Residences have the potential to create entirely new markets in their respective industries, while also positioning RH as a thought leader, taste, and placemaker. We also plan to open four new Design Galleries in 2021, all with integrated restaurants and wine bars: RH San Francisco, The Gallery at the Historic Bethlehem Steel Building. RH Dallas, the Gallery on Knox Street. RH Oak Brook, The Gallery at the Center, and RH Jacksonville, The Gallery at St. Johns Town Center. We talk about our people. I believe we have the most resourceful team in our industry, and again, not by a little. Tony Robbins talks about resourcefulness being the ultimate resource. It's not about time, money, or technology. It's about passion, persistence, vision, and values. Starting with no resources, we transformed a nearly bankrupt business selling nostalgic discovery items with a $20 million market cap into the leading luxury home brand in the world with a market value in excess of $10 billion. History has proven that men and women will work for a dollar but die for what they believe in. We say inside our organization, "This is not our Company, it's our Cause. It's an authentic reflection of who we are and what we believe in. Some people say, 'Don't take it personally.' Those people are not our people. Make no mistake, this is very personal to us." We believe brands with more control will become more valuable. We have always invested in controlling our brand from concept to customer, avoiding intermediaries who will never care as much as we do. That's why we have avoided partnerships, sponsorships, franchising, or licensing and continue to believe brands with more control will become more valuable. The easy path of expanding a brand rarely pans out to be the best path. The road to global expansion is littered with brands that put their trust in others, only to spend years negotiating repurchase rights decades later after the damage is done. That's not to say there won't be exceptions where there's an outstanding partner in a challenging country, but it will be a rare exception as we expand the RH brand around the world. We also continue to invest in taking more control of the customer experience and have been testing RH In-Your-Home in Los Angeles and San Francisco markets and are extremely happy with the early results. As Fernando Garcia, our President of Furniture Operations and Home Delivery, describes it, "RH In-Your-Home is not a different or better experience. It's a unique and memorable experience. As we extend the Gallery into our customer's home. With Furniture Ambassadors managing every detail, it creates an impression with our customers that can last a lifetime." Additionally, we are opening a new 1 million square foot furniture distribution center in Southern California this spring. The new facility will allow us to reduce delivery times by 7- 10 days for both outdoor furniture and special order upholstery in most major markets. 2021 has all the signs of a very good year. While 2021 will surely be a tale of two halves, the fact that we have a booming housing market, a record stock market, low interest rates, the expectation of a rebound in the economy and jobs market, combined with recent further acceleration in our demand trends, has us feeling more rather than less optimistic that it might just turn out to be two very good halves. While we expect to face continued difficulties ramping vendor production to meet demand, and we don't see the challenges with ocean freight or port congestion resolving themselves anytime soon, it's hard not to forecast first quarter revenue growth of at least 50% and adjusted operating margin in the 20% range. With the momentum in the business, we believe it is safe to say 2021 should result in revenue growth in the range of 15%-20% with adjusted operating margin expanding 100-200 basis points and ROIC in excess of 60%. We have made the decision once again to delay the mailing of our Source Books and the launch of RH Contemporary until the fall of 2021 to enable our manufacturing partners to catch up to the increasing demand trends. This decision should also support a strong second half as we have held back new collections for the past year, which will result in one of our largest new product launches in our history. Our RH Outdoor Source Book, filled with 10 new collections, is scheduled to be in homes starting this week with a digital Source Book and new outdoor collections live on our website today. This is a time to be defined by our vision, not by a virus. As we move past the dark days of the pandemic, let us remember our resurrection. A time we reimagined and reinvented ourselves once again. A time our results redefined possible for a home furnishings brand. A time when our performance forced the rest of the world to remove us from the pandemic pile and see us for who we truly are, a team of people who don't know what can't be done. This is a time to be defined by our vision, not by a virus. Carpe Diem. Okay, I'll turn it over to you, operator, to open the call for questions. Thank you. As a reminder, to ask a question, you'll need to press star one on your telephone. Your first question comes from the line of Steven Zaccone from Citigroup. Great. Thank you. Congrats on the strong results and happy to be a new addition to the earnings call. Gary, you have a lot of momentum in the business right now. There's a significant amount of product newness. You're growing the hospitality offerings and the margin profile is significantly outpacing your early outlooks for the business. With all this momentum in mind and thinking about how the world has changed from a global pandemic standpoint, where have you gained more confidence in the long-term growth potential of this business? I don't know if anything's really changed for us based on the pandemic. In fact, I don't think as much has changed as most people think or believe. You just start with the fact that our business is basically 100% direct-to-customer platform. We've been channel neutral our entire existence here. We don't really care where anybody places an order. Whether it was through the pandemic when orders shifted from stores to online or virtually with our people, as soon as our galleries reopened, our business looked pretty normal. I know there's a lot of talk about, well, this is going to accelerate the growth of the internet by 10 points over the next couple of years. That may or may not be true. I would say we're indifferent to that. We're really indifferent with the inherent channel shift that is going to happen over the next several decades. We've anticipated that. We knew that was going to happen. We're indifferent to that happening. People are kind of reframing their models and closing stores at an accelerated rate due to the fact that there's been this channel shift. That may be true because their model with an architected with an independent view across all channels, strategically or financially, it might have been an old model that was architected just for a retail business, and they've more recently got into a direct customer business and had to rush online without strategically thinking about all the implications of it. We built this business beginning 20 years ago as a channel-neutral business and as a platform looking ahead at the next 20, 30, 40 years and saying, "We could see the world going there." Whether it gets there, whether it goes 5% or 10% faster and there's a greater shift or a slower shift. We're completely indifferent. It doesn't change anything about our real estate strategy or online strategy, or anything we're doing. We believe great physical experiences, in this physical world we live in, are going to remain relevant. If anything, I think we're going to be even more relevant post this pandemic, because I think it scared a lot of people out of investing into the physical world, and it's just motivated a lot of people to follow the herd into rush to be an online business, rush to be a digital-first business, rush to be a digital-first business with a few stores. I don't know where everybody's rushing to. We only rush to someplace that we've figured it all out and we've thought about it a long time and very deeply. I'd say nothing has fundamentally changed about our strategy based on the pandemic. We're indifferent to the pandemic. We're solely focused on building the most compelling product assortment presented on the most inspiring, immersive platform in the world with the most incredible services that anybody can have in this industry. We think those are the right things to focus on. Not chasing shifts in the business. That's very kind of tactical. Oh, there's a shift to online. Great. If you didn't see it coming until now, you're way behind. Great. That's a very helpful detail. Just a question on the margin outlook for the 100 - 200 basis points expansion. How should we think about that from a gross versus OpEx leverage standpoint? Specifically on the gross side, you've had two strong years here of product margin expansion. Do you expect that strength to continue this year? Thanks very much. I'll let Jack take that one. Go ahead, Jack. Yeah. Well, like you said, in the last couple of years, our margin expansion has been primarily driven on the gross margin line. For fiscal 2020, of the 750 basis points increase, 3/4 nearly were in gross margin. I think on balance, you're going to see the quality of that margin increase continue. While we're not guiding specifically to say what exact portion of the 100 - 200 basis points is going to come from gross margin, I would characterize it as at least half, if not more. Yeah. Let me build on Jack's point. I think as you ask that, it makes me think about what is probably not obvious, if you're on the outside of this business. People have seen us reposition the product. They've seen us take pricing. I think it's probably not clear that as we evolve this brand and as we continue our climb up the luxury mountain, the product quality is going to continue to move substantially. The pricing will move with the product naturally. The value equation will get stronger, not weaker as we get smarter here and we develop better and deeper relationships with our key manufacturing partners. What might not be clear is as you take the prices up and you get product margin in that equation, you also get leverage throughout the supply chain, right? That's probably a simple mathematical equation that maybe not everybody's connecting the dots on. It's relatively simple if you think about it. If you just kind of try to capture the essence of Bernard Arnault's quote, that only in luxury products can you have the ability to make luxury margins, there's a simplicity and a truth to that. It would be very hard to build a model like ours if you're playing in the middle of the market. Great. That's very helpful. Thank you. Due to time constraints, we do ask that you please limit yourself to one question and one follow-up. Your next question comes from the line of Adrienne Yih from Barclays. Your line is open. Great. Thank you very much. Wonderful news on the momentum continuing. Gary, we've spoken before about demand creation, how it's no longer a single number on the P&L, like a percentage of sales, but a confluence of the investments you're making in Aspen, London, RH3, et cetera. It seems RH is building more of desire creation and a pipeline of future customers, who want the RH lifestyle, right, and everything that comes with it. How should we think about that advertising demand creation line in and of itself going forward? Thank you very much. It's a really good question, and it's the right way to think about it. Building one of the most admired brands in the world, desired brands in the world, whichever adjective you want to use, really, it takes a different path. It takes a different way to communicate. I think we're in a world where it's harder and harder to get your message out because there's so much information out there. I read a study, I think it was about a year ago, that humans are consuming 700%, seven times the information than they were 20 years ago. It's an astonishing number if you think about that from 20 years ago, we're consuming seven times more information because of these devices we have and the amount of information, the amount of platforms we're communicating on, and the ease of communicating to us. The way to kind of break through, right? Steve Jobs said something, if you watch his original kind of YouTube presentation when he's in his shorts and flip-flops on a little Apple stage when he came back to Apple, and he was re-introducing Apple and introducing the Think different campaign. He said, "We live in a really noisy world. It's going to be really hard for anyone to remember anything about any of us." He talked about marketing being about values, right? About those things you deeply believe in, and connecting with people about values. He talks about some of the great brands. He talked about Nike being one of the great brands in the world. He said, "If you think about Nike, they're selling a commodity. They're selling tennis shoes." Right? They're selling shoes for the most part. He said, "Yet, in their advertising, they don't talk about the shoe. They don't talk about the sole. They don't talk about the laces. They don't talk about it. They celebrate great athletes and great athletics." Right? He talked about Apple's belief that people that are passionate enough really could change the world. That in that Apple brand, the Think different campaign, it was also a campaign that was more than anything else, it was about the absence of the product, right? You didn't see an iMac, you didn't see anything in the campaigns. You don't really think about Nike, it hasn't built their brand based on any particular shoe. We all remember the Jordan shoe, but why do we remember the Jordan shoe? Because of Michael Jordan, not the specific shoe. Right? If you think about the great brands, and you think about how they built them, and how they communicated, very unique path. Think about this. Just stand back. Tesla is the fastest-growing, most valuable car company in the world. They've never had a TV commercial. Think about that. Yeah. People sign up for Teslas, right? We say inside our company, for example, we don't have a marketing department, and that may shock a lot of people. We don't have a marketing department because marketing a lot is about putting lipstick on the pig, right? It's like taking an average idea and trying to dress it up and spin it and make it something better than average. That's really hard to do. Right? That's just really hard to do. We don't have a marketing department because we say, "It's not what we say, it's what we do that defines us." Right? We have a truth group, and our truth group, in the past, they'd come to me and say, "Someone wants to write a story about this, and they're going to put us in that story." I go, "Well, that's not what we believe. Why would we want to be in that story? It's not our truth. Our work is our truth, and we define ourselves through our work. We connect with people through our work. That's why launching kind of a fully integrated, revolutionary ecosystem in a place like Aspen, where the wealthy and affluent visit and vacation, and doing something extraordinary there, you've got the attention of the right people. We're not going to bang pots and pans and say, "Look at us." We're just going to do some extraordinary work. That's why I say when climbing the luxury mountain and taking the path we've taken, all the luxury brands were born at the top of the mountain, right? You think about any luxury brand, they were all born at the top of the mountain. We weren't born there. We weren't even born at the bottom of the mountain, right? We were born underground. We were basically a bankrupt company. We had to kind of dig ourselves from out from under the ground, then decide we're going to make a climb that no brand has ever made. No one's ever tried to make this climb. People at the top of the mountain, they don't really want you to make that climb. You're not from the neighborhood. You don't get invited to their parties. We have to do work that is so extraordinary, so remarkable, so amazing, that it creates a forced reconsideration of our brand. That it forces people at the top of the mountain to tip their hat, right? To kind of say, "Nice job." We have to earn their respect. There's a famous quote that says, when you don't come from royalty, you have to earn it, right? This work that we're doing, the things that we're doing to build this brand, we believe is the right kind of work. We believe if we do extraordinary work that breaks through the clutter, people are going to talk about it. By the way, we put out a press release, a single-page press release talking about Aspen. I don't think I've ever had more billionaires reach out to me and send me notes saying, "What are you doing in Aspen?" Like I personally had three requests to buy one of our homes. Our partner has had about 12 requests. Nobody's even seen a home. We haven't even put a rendering up. When you think about that, we are about spaces. We're about design and architecture and living and spaces and places, that's what we're about. Doing incredible spaces, creating inspiring environments, we believe will break through the clutter. It's way more powerful than just doing an ad, trying to talk about it. That's why we don't have social media, why we don't have an Instagram account. We don't have a Twitter. We don't do this, that. Everybody's told me, "You need to tweet. You need a Pinterest account. You need to have an Instagram account. People will follow you guys. Gary, if you tweet, you'll have all these followers." I'm like, "I don't want to spend my time thinking about what to tweet tomorrow." I don't want to spend my time, I don't want to have a department that's reviewing what pictures to put on Instagram that day. Just as a point of reference, we don't have a Pinterest, a Twitter and Instagram, yet we're the most pinned brand of our kind in the world. We're the most tweeted about brand of our kind in the world, and we're the most Instagrammed brand of our kind in the world. That's why we believe it's about our work. That's why we're doing the things we're doing. By doing the things we're doing, like even building the inspiring galleries we're building, we're now looking at the model, and we're saying, in these galleries, and especially the ones with the restaurants that are driving significant traffic, we don't believe we need to spend as much money mailing catalogs in that market because we have thousands of people we feed every week. When you think about our financial model and opportunities and leverage and investments, just because we used to invest a certain way doesn't mean we should keep investing that way. As we continue to innovate, we can see around more corners. We have more data. We have more learning. I sit here today and I go, "Gosh, we haven't mailed a Source Book in how long? Uh- A year, right? Yeah. Yeah. A year. We won't have mailed a Source Book for 18 months or something by the time we mail the fall Source Books. I don't know. Do we need to go back to mailing Source Books twice a year? Do we need to mail them as deep, like in the markets where we have these magnificent, architecturally significant spaces and places we built, how much are those worth to marketing, right? I get it. You might be closing stores if you're building kind of crappy stores that are in line in a mall that everybody's got a glass storefront, and all you have is your logo up above it. That's different. That's not what we're doing, right? We're doing something different. That's why I say you can't put us in the pandemic pile, right? You can't put us in the pile with everybody else. You'll miss the whole story here. Gary, that's incredible. Long answer to your question, but it was one of the best questions I've gotten in a long time. Your philosophy is always welcome. Jack, a really quick one, actually. This one is 73% and 96% demand growth translate, and then we're now in the part where the stores were closed. The at least 50% revenue growth, is that due to port congestion or lack of inventory? It seems like the spread between those two numbers would be tighter. Look, you're going to see the same dynamics in terms of the supply chain constraints and for the same reasons that the demand growth exceeded revenue growth in Q3 and Q4, with the strength in business, you're going to continue to see that in Q1 and potential acceleration given the strength and acceleration in demand. Yeah. Again, the keyword is at least. Right? Yep. We've given you at least how many times over the last few years. At least this. At least 18% operating margins. It's at least 20%. We want to make sure whatever happens, we're going to hit the at least. We generally beat the at least pretty handedly. There's a lot of things to kind of consider. At least means we have more than that. Understood. Great luck. Great job. Thank you. Thank you, Adrienne. Your next question comes from the line of Curtis Nagle from Bank of America. Your line is open. Good afternoon. Thanks very much. Gary, perhaps a bit of a piggyback question on Adrienne's. Perhaps just a little bit more specific. Just thinking about the ecosystem that you guys are in the midst of rolling out. Just kind of two questions. How meaningful do you think that could be as a brand enhancer for RH over, say, the next three to five years? And as a standalone business, how important as a revenue and profit contributor, or is I guess kind of the former points more important? How should we think about that? Yeah. Well, I think it's going to be a meaningful brand enhancer. I think it's funny. If you had asked me five or seven years ago when we started working on this I would've told you it was going to be a meaningful brand enhancer. Now I look back and I go, "Oh, that wasn't even any good at all what we were working on five, six, seven years ago because we tend to keep making things better and that's the great thing about only having a vision about something versus start working on something, right? You really learn when you start doing, and that's when you can really start accelerating your education and connect more dots and see around more corners. I think what we're about to unveil in New York and Aspen, I don't think anybody has any idea what it is. I really, I don't. I've been fortunate enough in my life that I've been traveling since I was a relatively young man and traveling all over the world. I've been in a design business, whether it be at the former company I worked at or today, where we search the world for the best of. The best of design, the best hotels, the best places. Where are we going to get inspired? What are we going to see? I've seen a lot, right? I've been to most of the Aman Resorts in the world. I've been to so many places, both personally and professionally. Someone asked me, "How long have you been working on the Guesthouse?" I told them, "About 30 years." Because that's how long I've been thinking about it. That's how long I've been traveling to really great places and asking myself questions like, "Why don't they have this?" And, "Why hasn't anybody thought of that?" And, "Why does it have to be like this?" I think when you see what we've done with The Guesthouse, there's just things that no one has ever done in hospitality. It's why they say most of the innovation in the world happens outside. It comes from outside of industries, not inside of industries, right? Again, I go back to Tesla. The guy never built a car, ever. It's massively turned over the car industry, and now every car company in the world is racing to catch up, racing to have electric cars, right? We've never opened a hotel before, and we're not going to now because it's not a hotel, it's The Guest house, and it's importantly said that. When you see our website launch when we open, the first thing you're going to read on the website, it says, "This is not a hotel." Right? Because it's not. It's a completely new way to think about an experience like that. So I think when you do work like that, one, it has a great chance of having people at the top of the luxury mountain tip their hat because they haven't seen it. I mean, think about this. Go to the top of the luxury mountain and say, "Okay, who lives there? Who has the biggest house?" Bernard Arnault, right? Runs the biggest luxury platform in the world. I say internally, I joke around and say, "Look, Bernard Arnault just bought Belmond for $3 billion, right?" Nobody thinks we're impressing Bernard Arnault. I guarantee you, when he sees this Guest house, he's going to be forced to tip his hat because nobody's seen anything like this in the world. That is what is going to create the conversation, right? That is what's going to change the perception of the brand. A brand that started underground, had to dig its way out of a grave, and start climbing a mountain that's never been climbed before. You just have to do things that people can't imagine. I think this is all about brand building. It's all about truth and respect, right? The work is our truth, and I believe our work will be respected, and our truth then will be respected. People will listen closer. They'll pay more attention to us. Out of that, and same thing with the homes that we're doing, the residences that we're doing, and other things you'll hear about. Let me just go back for a second. Let's just start here. We never knew anything about restaurants, right? A few years ago, everybody said, "Oh, you're going to open a restaurant? What are you going to do? Who's going to run it?" This and that. We had a partner to start. Now we run the whole thing ourselves. We're a vertically integrated hospitality organization. We have 10 restaurants today. Our restaurant volumes and how they're tracking, because we keep innovating and evolving. The things we've done in the last 18 months, 12- 18 months, you can't even see them yet because of the pandemic. Our restaurant volumes will rival the highest volume restaurants anywhere, besides the one or two great ones. When we reopen and really reopen, when we can seat all our restaurants, our volumes are going to be among the best. People used to talk forever about mall developers really wanted a Cheesecake Factory because they did $10 million on average, a restaurant. It's very likely, very soon our restaurants will be at that kind of volume. It has to do with not just the number of customers coming through, but the average ticket of the customer coming through, which then influences who's coming through, which makes sure we have an audience that is aligned with the target consumer and who we want to impress. We're going to be a pretty good restaurant company. If you looked at the numbers and the returns and the margins on our restaurants today, they're three times better than they were three years ago. We're pretty good at that. I think what happens is with things that you really care about, right? We talk in our company about three lenses we look at every decision based on. We choose based on what is the emotional value of an idea, what is the strategic value of an idea, and what is the financial value of an idea, in that order. Right? Because if you just focus on the financial value of an idea, if nobody really believes in it, if nobody's going to die trying to bring it to life, the financial value is never going to manifest itself. If you've got ideas that have really high emotional value, that the people in the organization really give a shit, they really care about it, that they're going to get knocked down 10 times and get up 11. The effort and the passion and the learnings that happen just change the outcome. I've seen things that have really high strategic value, really high emotional value, but moderate financial value that have turned out to be the biggest financial ideas in the company because the work turns out to be so good. On the opposite hand, I've seen just the opposite. I've seen things with moderate emotional value, relatively high strategic value, and super high financial value. That was the $500 million idea. It wound up being a $5 million idea because nobody cared enough about it. To do great work. You want an extraordinary outcome, you have to put in extraordinary effort. There's no shortcuts, right? Elon Musk was asked, "Elon, you run three different companies. You run Tesla and SolarCity and SpaceX. How do you do that?" He said, "Look, it's simple. It's just physics." He goes, "The average executive might be working 40, 50 hours a week." He said, "I work about 150- 160 hours a week. I work three times more hours than the average person, I could do three times more." He goes, "It's very simple math." If you hung out with the people in our organization, you'd find out that we really love what we do. You cannot stop us. We are going to figure it out or die trying because it's more than just a job to us. It's our life. When you work on stuff like that, the outcome tends to be much greater than you could even imagine in your original vision. You meaning us, right? If somebody said, "Hey, do you think you'll ever make money in the guest houses?" I would've said, "Yeah." I said, "Look, if I don't lose a lot of money, it's going to be a really good thing for the brand." I actually think now, when I look at it, I think this is going to work. We haven't sold a room night yet, but let me tell you something. I sure want to stay there. Not just because I built it, but we have thought so deeply about it that we're going to do things that no one in hospitality has ever done. They're really good ideas. The same thing with our Residences. We've designed the one on Red Mountain. It's shocking, it's so good. It's because we're passionate about it. These ideas have huge emotional value. When it has high emotional value, people don't put in a day's work. They put in a week's worth in a day, and the outcome reflects that. I think at a high level, these will massively elevate and render the brand more valuable. I'm hopeful today that they'll also have really good financial models. I feel more clear about the homes, by the way. I think that the homes is easier math for me because I own homes and bought homes, and I'm the consumer, and I know what we can build and what we can sell them for and how much we can make, and I think we'll create an extraordinary product, and I think we'll make a lot of money in the home business. Whether it's single-family homes, condominiums, things like that. If we do luxury apartments, which is a really interesting market. There's no great apartments in the world. They're just not designed well. Think about it, if we do fully furnished luxury apartments, right? How many people need to go into a market, live somewhere for a year or two, don't want to buy a home, but they got a lot of money and they want to live in a really beautiful place. We think that could be a fantastic idea. The Guest house thing, I don't know. We're doing things no one's ever done. We got no meeting rooms. We've got no weddings, no nothing, no celebrations, very private. It does a few things better than anybody else in the world, but it doesn't do all the things. It all depends what kind of room rate can we get for these extraordinary rooms and this unbelievable sense of privacy and luxury we've created. We'll know soon. We're excited about it. Clearly, and thank you for the very thoughtful answer, and hopefully, come fall, we can start to see some of this in person. Good luck with the rest of the year, and thanks. Yeah. We'll figure out how to kind of do. We're thinking about, hey, how do you do a launch party in a 10-room hotel, right? You can't have just people walking around the hallways, right? We thought, I thought I might do a week of sleepovers, right? Where you get invited for a sleepover. If you get two people in a room, times 10 rooms, we could have 20 people a night. That's still 100 people. We get the right influencers and the right people. We're going to try to open this, we think, coincide with Fashion Week, and we think Fashion Week will come back, and everybody in New York will be back from the Hamptons. We think people will be traveling again in September. It could be the greatest coming-out party in the world. Some of the who's who maybe want to come for a sleepover. Get to see something no one's ever seen, and we start the right conversation. I think what we'll do is probably during that week, we'll stay there for a while, and maybe it's a good time to do an investor meeting in New York and bring everybody up to speed and do a tour of the Guesthouse probably right before we really open it to the public. Once it's opened, you can't tour anybody through it, right? It's about privacy. We can't be taking, "Hey, these are a bunch of Wall Street guys we're taking through here." Sorry, excuse us. Yeah, we know this is about privacy, but not today. There's going to be one shot to kind of really see it, and we'll have to do that before it opens. Your next question comes from the line of Max Rakhlenko from Cowen and Company. Your line is open. Great. Thanks a lot, guys, and congrats on the incredible quarter. As we think ahead about the 100 - 200 basis points of EBIT margin expansion in 2021, what do you see as the biggest buckets of opportunities? Longer term, as we look ahead to the 25%+, what do you see as additional opportunities beyond 2021? Look, we've kind of said 100 - 200 basis points. We also kind of put some dots out for you, right? We said, "Hey, if that $150 million had shipped this year, we would've been at 23%." Start with, we're kind of at 23%. We got another 100 basis points and to get you to 24%, which is 200 basis points higher than 21.8%, right? 22%. You can get there pretty easily. It's not a lot of moves. Some of it will depend just where's the revenues really go here? We don't need a lot of revenues to kind of get to where we're pointing you. If for some reason these revenue trends continue, like, I mean, it's really interesting. I've never seen anything like this. I mean, I've been through the great recession. I've been through multiple recessions in my career. I've been in the home category now, like how many years? 34 years. Jack reminded me the other day it was my 20th year anniversary here. Not to get to everybody to wish me happy anniversary, but I didn't even know that. He goes, "Oh, God, I'm sorry. I missed your anniversary." I go, "I didn't even know it was my anniversary." I've been here 20 years. At Williams-Sonoma 14 years. I've been 34 years in the home business. I've seen a lot of cycles during that time. I've never seen anything quite like this. When there's really good news like this, I tend to be the pessimist in the company. I tend to be the one, look with this, whatever demand hit we're getting right now, it's not because of us. It's not going to stay. Don't architect the business for this. This is going to go away, and it hasn't went away yet. I've talked to some pretty smart people that have given me different insights into Look, Gary, here's one that I think is interesting for everyone to think about. I thought this was really smart, and it comes out of an analysis from a really credible, deep-thinking, smart person. The move of America that you're seeing today, the pandemic shift of out of cities into suburbs or into second home markets. Which, by the way, the suburb thing's a great thing for us because 80% of our business is in the suburbs. The move to the suburbs is not just a move to the suburbs, it's a square footage expansion by they believe it's 2x or more square footage expansion for the consumer. I hadn't thought about that before. I thought that was a really interesting point. Their math said, look, Gary, your customers that are moving from the cities, maybe in a 3,000 sq f t apartment, are moving to a 6,000-10,000 sq ft house in the suburbs. They didn't have outdoor furniture in their apartment in the city. Now they all have outdoor furniture because they all have big yards and lawns and pools and so on and so forth. I just like that stunned me. I hadn't really thought about it like that. I didn't think of the square footage expansion of the consumer. The other thing they said was that the issue with getting a contractor right now is a huge issue. You could go out and buy a house, but if you have to remodel it or do anything to it, you have to wait six months to get a contractor. They believe six months or longer in some markets. There's this real lag. This person believes that, and they said this to me, and I was like, I didn't even know how to respond. They believe that our business was going to accelerate because of the lag, because of this massive shift, right? The longer the pandemic went, the more people started moving permanently. I'm not talking about the people that kind of flew back to their place in the Hamptons. That's very different, right? Think about New York. Everybody went to the Hamptons that could. Anybody that had a house was at their Hamptons house, right? They relocated there for the year. Anybody that could rent a house in the Hamptons rent one. Everybody could buy one, like, bought one. A lot of them are coming back, and at first, everybody was like a temporal thing. All of a sudden, there's this shift of a different perception of how people wanted to live and could be a more permanent kind of thing. I think this moving thing could be a much longer tail and a much bigger move. You say to yourself, "Well, how long does it last?" It all depends on how permanent the move is, right? If you think about our business today, I'll give you some numbers that I've never really talked about before, but our business prior to the pandemic was 80% suburbs, 10% second home markets, and 10% urban markets. When I say urban markets, I'm talking about the city, right? Beverly Hills is not the city in Los Angeles, right? The city is the vertical part of Los Angeles that's called Los Angeles City. We have some vertical markets like Manhattan or Chicago, right? That are really vertical, that have a lot of high-end homes, and we have relatively big volume. Almost everywhere, our business is much more suburban-driven, and that makes sense. The homes are bigger, you've got backyards, you've got kids, you've got more bedrooms, more spaces, more family rooms etc. Then the pandemic hit, and it shifted things, and you have this explosion of second-home markets. All that happened to our numbers, really, is the second-home markets went from 10% of our business to 20%, and it grew exponentially faster because. This is a percentage shift, right? 12%. Huh? 12% 12%. 10% to 12%. Yeah, 10% to 12%. Suburbs basically stayed the same, and cities just went down by two points to eight. If you think about our model of being 92% of our business, and this is not where the demand generated. This is a shift to addresses. This is where the product was going, right? If you think about 92% of our business is architected perfectly for whatever long-term change this pandemic has. There's another study about the big shifts in moves when I was trying to remember the data. Yeah, this other person was talking to me about it, and how every so many years, there's a shift here and there's a shift, people are moving to here. Like the big move into the suburbs of the 50s and 60s and 70s, or You had kind of a move back into the cities over the last 10 - 15 years, right? Gentrification and all this kind of redo of cities. The shift that might be happening might really stick. That's the logic that certain people are kind of sharing with me, and they think this is not temporal. They think there's going to be a lot less people that go rushing back to the city. They think that the rush back to the city is going to be a much younger consumer going back, and that the consumers that are 40, 50, 60 years old that moved out of the cities are going to stay out of the cities. They don't think they're coming back. When I think about it, that becomes really good for our business long term. That also means even the moves within the place. If you think about it, if you moved out to the suburbs, you scrambled and got a second home during this pandemic rush, the kind of It's almost like a movie, right? Everybody's got to leave the cities and all the cars are backed up and you get out and it's. The odds of you getting the house you really wanted in that moment is really low, right? I got to believe there's a lot of people renting homes. I know we're doing a lot of quick design installs. People need the furniture in two weeks, right? Luckily, here's another advantage. This is like kind of a little side point to this, but I think it's worth saying and sharing with everybody, as we all try to figure out where things are going and what's happening there is, like I thought about this and I thought, why is our demand really accelerating right now? What is happening? I think that there's this backup, this pent-up demand, just like people couldn't get contractors, people now can finally come. For all the people that are moving out and they need new furniture and they need it in 30 days, or they need it in three weeks or two weeks, I think we're benefiting now because we actually stock furniture. We are one of the few places that actually stocks the product, and you can get it quickly. Not everything. We have a big special order business and we're backorder now. This is where times like this I think our model is advantaged versus a Wayfair, Perigold, anybody else online, what I call a marketplace model, where they don't own the inventory, right? That's one of the beauties of a model like that. It's a low capital model, and should set up for high returns if you can get the earnings model to work right. No one ever really thought about what's the inherent weakness of that model. If you go on Wayfair and, like we mostly look at what they're doing on Perigold. We look at anybody who might be competing with us. The amount of out-of-stocks and what you can buy there is unbelievable because their weakness is you've got a lot of these small un capitalized businesses trying to just sell shit on a platform like that, in a marketplace. They'll take anybody, by the way. It's not a big approval process if you want to go sell something on Wayfair. You don't get to that many vendors that quickly if you have really high standards of who's selling on your platform. You can't possibly talk to that many people. It means that a lot of low-level people are approving a lot of new vendors. I look on there, and I know some of the people. We know who the factories are all around the world, and again, those people don't have any money. They can't afford to have the inventory. Right? I think in sustained things like this, we actually, I'd never thought about it, but we actually have the inventory. We actually, if you needed your house furnished next week, we could pull it off if you live in a major market. That's a big opportunity for us. I want to just go to that point about the 25% operating margin and what are the opportunities beyond 2021. Just scale this thing, right? We have a lot of strategies and initiatives that we think are margin-enhancing strategies initiatives. I think while RH In-Your-Home is initially an investment, I think it's going to have a great return on investment. We just have a lot like that. We keep fine-tuning our model on our new galleries. I think they're going to be more productive and less productive. Our restaurant business is going to be massively better. Our Waterworks business, versus three years ago, I think we've got the EBITDA will probably be 12, 14 points better, 15 points better, something like that. You just scale this thing. Just think about this. We're a $2.8 billion company that could be so much bigger, and we've built a really smart and simple platform here that you can scale. the leverage as we scale, you think about Somebody brought up Sonoma to me last week, and they obviously had great results and fantastic outcome. I think they're doing a tremendous job. they're already at $6.5 billion or something. What are they? $6.5 billion, $7 billion? Say, yeah. $6.5 billion, right? We're not even half the size of Williams-Sonoma, and we have the operating margins that we have today. Right? just do scale math. Pick up 20 basis points in eight different places in the company. You get to real leverage, right? that's why we think we have a line of sight to 25% operating margins plus today. So far, every margin target we've given you, we've got there much faster, much sooner than later, right? We wouldn't be so confident and clear and tell you if we couldn't see it and we couldn't draw the straight lines to the numbers. We just keep learning here, and we're kind of always unsatisfied, always on the move. We rarely celebrate. It's for a moment, it's not that we don't at all. We get super excited, we're constant students. We learn, if you keep learning, you keep seeing more. If you can see more, then you're just never satisfied with where you are. That's kind of our culture. I think this team, we've integrated 10 new senior leaders into our leadership team. We've got some people I can't talk about yet because we haven't went public with the ideas. We've got leaders of international supply chain. We've got lots of new talent sitting around the room. That also allows us to do more. We've made a lot of human capital investments here. Anyway, long rambling answer. Sorry about that. I thought some of that stuff could be helpful. It was helpful to me to think about how to think through this pandemic, just the moves and the move to the suburbs and how that might affect us and the square footage growth. I think the square footage growth is a really interesting one because you could be selling 2x to 3 x more furniture just because to the same consumer. It's interesting because our ticket's going way higher, our average orders are going way up. It's kind of actually playing out like that. Great. Thanks a lot. That's incredibly helpful. Best of luck. Great. Thank you, Max. Your next question comes from the line of Steven Forbes from Guggenheim. Your line is open. Good afternoon. Gary, you mentioned getting more control in the business. I was hoping you could maybe expand on that theme, right? Where your mind is at. What other aspects of the business are you looking at gaining more control over, whether it be manufacturing, whether it be the whole design process? I think RH In-Your-Home experience. Would love to just hear your thought process on some of the ideas around control. Yeah. Steven, that's a good question. As we think about it strategically, our model is going to throw off a lot of cash here. What are we going to do with that cash? Clearly, you can invest it into the business, you could buy back your stock, you can pay dividends or so on and so forth. If you look at our model and look at it over the next five years, you got to kind of get out in front of it and say, "What should we do? Where do we see the biggest opportunities are to create more value?" One of the biggest ones we're discussing is this idea of controlling more of the brand. I think we're realizing as we scale the luxury mountain, there's just so much fragmentation. I always like to say products of this quality has never been made in these quantities. I think taking more control of the product pipeline, whatever that might mean, whether it's the manufacturing, whether it's the sourcing. There's so many aspects of it. Whether it's raw material procurement. Most of our furniture is made with four species of wood, right? I don't know. Do we take positions into certain woods to give us a competitive advantage? Meaning like, one, it's just sometimes getting the raw materials. If you're as big of a platform as we are in outdoor furniture, securing teak is one of the challenges. Should we own outdoor furniture manufacturing so we have access to have more control, and more access to raw materials, that could give us a massive competitive advantage. Other parts of the business we've done. We have our own furniture upholstery manufacturing in North Carolina. It's not very big, but we've learned a lot doing it, and we've got thoughts about that. Also just thinking about if you keep climbing up that luxury mountain, there's less and less scale in manufacturing as you get up there. It's more what I call a workshop business. Very high-end, very, I should say, couture and bespoke maybe. Put out a breadcrumb. How do you scale that? How do you build a platform and scale that? Just think about this, if you think about going global, right? Our goods tend to be bulky and heavy, and it's not super efficient shipping furniture all around the world. It works today. There's certain things that different countries are better producing than others. I think with technology, the world's going to keep getting smaller and smaller. Competitive advantages between countries, I think, are going to go away long term. I think there's going to be a more neutralness to the world. It's not going to be so easy to find cheap labor here or inefficiencies here, someone can manufacture that. I think the world in 10 years from now is going to look very different than the world of today. We think about it as, what's the right way to build our platform? Should we have furniture made in America for America? Should we have furniture made in Europe for Europe? Should we have furniture made in Asia for Asia? Is that the right model? You build a supply chain that is country-centric, especially where you think your biggest parts of your business are going to be, and you replicate manufacturing capabilities. You don't have single points of failure. One of the things you can learn in the pandemic or something like this, right? You have all this demand, and it's like you got one person making that. You have tariffs happen and like, "Oh, crap. We make all of this there." Now all of a sudden there's 25% tariffs and you got no move, right? Your only move is to kind of negotiate and try to figure out any way around it. Think about, just because those situations hit us is, what does a global supply chain look like for a $25 billion brand? What should that look like? By the way, no one's built one in our industry. I think we've got a chance to completely whiteboard it and do something that's just never been done. We've got the capital structure to invest, right? To invest to have even more strategic separation and capability than others. We're at the high end, right? We have a lot of leverage in what we do, right? There's a lot of leverage selling the things we sell versus selling the things other people sell at lower ends of the market. We're thinking about every aspect, whether it's the supply chain and home delivery, whether it's the manufacturing, whether it's raw material procurement and how do you control the raw materials and have leverage there, but also just leverage, just have accessibility. If we have a run on teak and we can't get the teak, that's you're crippled, right? Throughout there's going to be opportunities. Is there strategic acquisitions we make that give us capabilities, and things like that. How do you think about capital allocation over the next 10 years as we try to fulfill our vision. It's the right things to think about. We're spending a lot of time thinking about all those things right now. Thank you for that. And we- Just give me a Yeah. Go ahead, Gary. Go ahead. I was going to say, we've already made with those some of the things I can't tell you about yet, but you'll hear about soon. Well, we anxiously await them. Maybe just a quick follow-up. Given the unsolicited proposals for the residences out in Aspen, it sounds like it has you thinking, right, that the idea is bigger, maybe not bigger than you originally thought, but curious if those proposals indicate something bigger about the opportunity, maybe a quicker maturation behind it or where the mindset is on just the residences as a whole. Yeah. I don't think we've got to rush here. I think we've got to rush to learn and kind of conceptualize the right model. I don't think it's going to be hard for us to build beautiful homes and sell them. I think that we can do. What is the right model? How do you do it? What do you got? Is this one where Let's say we decide to really do this. Let's say we have some tests and we're like, "Wow, this really works." We've also had strategic inbounds, people that want to partner with us, and people that have read the Aspen press release. I've had CEOs of companies that, reaching out, want to know would we want to partner and build RH Homes together and do a JV. There may be opportunities like that, right? There may be people that have what we don't have today, the ability to procure and secure land, know how to build homes at scale, but don't have our creativity, our taste, our style, don't have our brand, so to speak. There could be opportunities where you see us partner with a major home brand or acquire one. I don't know. If we get really good at it. There's lots of optionality here. I think The great thing, I've said for years here to the team that we're only in the 10% of the business. Sometimes new people would say to me, "What do you mean we're only in the 10% of the business?" We're in the 10% of business. On average, at the high end, people spend about 10% on the furnishings of their house compared to the price of the house. If you bought a $10 million home, you spend about $1 million furnishing it. You spend a $5 million home, you spend on average $500,000 furnishing it. Right? That's just the math, $2 million, probably $200,000. That's generally the allocation breakdown. It's not always perfect, but it's directionally right. I've always said, we're in the 10% of the business. We don't sell the home. We're actually handicapped being in the 10% of the business because we're a lot of times furnishing a really crappy architecture home, like a badly designed home, a bad proportioned home. It doesn't even render our goods more valuable, right? All of our galleries are architected beautifully, proportionally, in a way that it renders the goods more valuable. Most of the homes we do, most homes, you go on, again, I would say go on Zillow, go on Redfin, go on whatever one you want. Just click through and tell me how many homes really have great architecture, and how many have good interior design. It's such a small number. It's less than one in 100. It's less than 1%. I love thinking about this market in that way. Whenever it's like that, when the numbers look like that, you can create a new market, right? You can create an entirely new market. That's what our big idea is. It's not just to sell some home. It's to create a new market at the high end for homes that people really want an RH home because they're just so well designed. Not furnished, just the architecture, the logic, the siting of the house, the landscape architecture, the pool, the everything, the whole thing is just so well designed, and then it's furnished incredibly. You just want to move in, right? We save you time. Again, people with more money have less time. People with more time have less money, right? What can you sell at the high end? You can sell time value. People will pay for time value. There's a lot of people on this planet that have more money than time. They've accumulated wealth and now they're my age. You're 63. You think about how much time you have left and you look to buy time value. Right? I think that's, if you said, "What are you really going to sell?" We're going to sell time value, and people will pay for that. Thank you, Gary. Best of luck to the whole team. Thank you. Your next question comes from the line of Anthony Chukumba from Loop Capital Markets. Your line is open. Thank you so much for taking my question. Gary, I'd just like to say as a sell-side analyst who's had a buy rating on the stock for the last 300 points, I don't want you spending your time thinking about what you're going to tweet later today either. Just wanted to kind of get that out there. Thanks, Anthony. No worries. That's good. No worries. These are more just kind of housekeeping questions, probably more so Jack than Gary. Specifically, I just wanted to see if we could get a little bit of color in terms of specifically the gross margin drivers, the SG&A leverage drivers, and then just what your CapEx expectations are for 2021. Thank you. Yeah, Anthony. I think historically we've talked about very strong results as far as on the product margin side as it relates to gross margin. Q4 is no different than what we talked about in Q3. About 3/4 of the pickup is in our product margin, which had a number of things that we've talked about, the climbing luxury mountain, increasing the quality of product, cycling the rug business, operating the rug business at a higher margin, among other things. Outlet business, as we talk about in MD&A, in our filings, obviously is a lower promotional level. That's where you're seeing the predominant amount of it. As far as CapEx for the year is concerned, you'll see in the 10-K when it's filed next week, the range that we're giving is $250 million-$300 million. That is a little higher than this year we ended up with sort of adjusted CapEx you need to look at because a portion of it ends up. It's in the op section of the cash flow, but this year we ended up at $180 million. What I'll say is about the elevation of the CapEx is there's a number of sort of development deals that are happening this year that will monetize in a future period. Just finishing one of the stores we're opening was on a land lease. There's just a number of factors that are just driving a little higher CapEx this year, including starting to spend money internationally. Got it. That's very helpful. Keep up the good work, guys. Thank you, Anthony. Your next question comes from the line of. Keep up the high rating. The next question comes from the line of Michael Lasser from UBS. Your line is open. Good evening. Thanks a lot for taking my question. Gary, there's been a sharp increase in the profitability of many of the players in the home furnishings industry. Do you think that the sector is now just structurally earning higher margins? How does that inform how to think about RH's profitability in the second half of the year, where when you talked about the tale of two halves in the second half, you will be facing some unique factors and much more difficult comparisons? Sure. Yeah. Good question. I think to answer that question, you really got to look at what's the revenue growth that the businesses experienced in 2020, right? That's why I made the point, and I kind of repeated the point in the letter that we hit 21.8% operating margin on 8% revenue growth, right? We had 750 basis points of margin expansion on 8% revenue growth. That's the first part of it, right? You can kind of book that, right? That's not going away because that's got nothing to do with the pandemic. That's got nothing to do with home furnishings tailwinds. 8% revenue growth, nothing to do with that. That's all structural. By the way, it's about what we thought we were going to earn before the pandemic. Okay? Our model was about 22%, what we thought we'd make. Then the pandemic hit, and when the pandemic hit, what it did is it just turned it into two halves. Did we optimize a little bit here and there? We did. Our plan was to have revenue growth slightly higher. We came out right about there. If you've got people that have grown faster in 2020 than they had historically, you got to kind of say how much of that sticks, how much of the leverage sticks. Then there's a really important one to kind of figure out where everybody's going to land here, is what the price structure and the promotional structure of a business. Right? We didn't get less promotional. We don't have promotions, right? The only thing we have is we have things that we're discontinuing out of the assortment, but we're not a promotional business, right? There's businesses, if you study our industry, there's businesses that have pulled back on promotions as they should, right? They pull back on promotions and were able to have X amount of demand or revenues. When the world cycles, at some point, can they maintain a non-promotional stance? I'm sure people have picked up 200 basis points, maybe 300 basis points of product margins because they used to be really promotional, and now they don't have to be promotional because there's this increased demand. To me, that's the open switch. How much of the revenues stick? How much of their margin in our industry is tied to an increased revenues, which ours is not, because our revenues didn't slip. If you would have saw the $150 million of revenues hit in this year, we would've been at 23% operating margin, 120 basis points of our model, we would've pointed this to you. We would've said it's kind of, in our view, one-time and maybe not structural. There's nothing about our revenues in 2020 that are pandemic assisted. There's nothing about our product margin that is pandemic assisted. We were not less promotional than we planned to be. We have a membership model. The margin growth you saw on our product is real margin growth. It's not necessarily temporal at all. That's what I'd say. The other piece, the other one I'd point to is advertising. Right? Particularly if you're looking at somebody like Wayfair, I'm not picking on Wayfair, I think, honestly, at first I thought Wayfair was not going to make it. I thought, when I studied their S1 when they were filing, and I thought, like, "Yeah, this doesn't look like a real thing." I've grown to appreciate and respect the platform Wayfair has built and their ability to generate a lot of revenue very quickly. The question in my mind with Wayfair is what's the real structural margin in the company? With someone like Wayfair, I think you're snow blind right now. Right? If you think about every restaurant in America and most of the world closed. Anybody selling kitchen stuff, the run on kitchen, like to go buy toasters and pots and pans and other things like that, because now you're not eating out. Even people like my household, because my girls are away in college now. I eat out every night. We eat out every night. My partner and I, she went out and did like a raid on the kids. We've got a whole brand new kitchen, right? Because we are going to be home. We got all kinds of new stuff. She's cooking stuff she's never cooked before. I look at kind of categories like that and I go, "Hmm, those may not be sustainable." Those are the things where she was going to buy it whether it was on sale or not. Right? She was going to buy the cookware whether it was on sale or not. The promotional aspects of some of these businesses, some of these categories, very, very different. Right. When the pandemic first happened, I was analyzing everything, and I was going on everybody's website. I think I joked around, I said, "Wayfair has 60 pages of toasters." They do. It might be more now. It's 60 pages of toasters. I think 40 - 60 pages are sold out. You have a run on businesses like that. When I think about the industry, and I think about where we sit in the industry, I try to understand the differences of what revenue was a gift. We have a lot of demand that was a gift, no revenue that was a gift. Right. We didn't slip any of it. We have 8% growth and the 750 basis points. The other one is advertising. Excuse me. You got to think about advertising leverage someone like Wayfair got or every business, right? We all got some advertising leverage. We missed a Source Book cycle last year. Right? Call that, I don't know, $40 million, something like that. Right? $40 million-$60 million. Yeah. Full on the year, which we'll see in the 10-K, is $49 million less in advertising. Yeah. 40% $49 million less. You've got, what is that? About a little less than 1.5 points, right? You'd say, "Hey, Gary, can you guys sustain this? You got to put that advertising back into the model." That's a good question. I'm not sure yet. I'm not sure. That's something that we think about, like, do we need to go back to mailing a book twice a year? Can we mail less books? Are our big galleries and our investments in restaurants driving more traffic? What do we need there? I'd say those are the ones, the revenue, the promotional structure and margin structure based on promotions, and then the advertising piece of it. Of course, if people got a big lift that they're going to get occupancy leverage and some things like that might come back. I don't know how sustainable, if I look across our industry, the margin structure is as of today. Everybody wants you to believe it is. Yeah. That's why I made the point on ours. I'm kind of really happy we only had 8% revenue growth because. Yeah Nobody can be snow blind here, including us, right. I like, hey, do we have roughly a 22% operating margin business today without a pandemic? That's what we got. How much pandemic boost are we going to have in 2021? If our revenues are up 15%, maybe a little, right. Because we're going to start growing internationally. Remember, when we start growing globally, we're going to open countries. We're going to open in Europe and be able to take online orders and ship to all of Europe. It's not like we're opening in a market like Sacramento, or we're opening a new store in Vancouver, Montreal or something, and we're opening a huge country. Europe should be the size for us, close to the size of the United States in volume. Right? That's big. It'd be like us coming to America with a brand that people know. I saw some analysts, I don't know if they're on the phone or not. They tend to write kind of negative things about us all the time. They know who they are. Anything they could say, talk about, "Oh, their business is down in their New York restaurant. Oh, they're not going to make their fourth quarter." It's like, give me a break. Anyway, in one of their notes, they said, "Yeah, we have no market awareness. People don't know us." Don't look at some average market awareness study. Our customer is the top 1%. In many cases, the core core of our business is the top half of 1%. Do that brand awareness. Go into London, go into Paris, and go talk to the top 1%, who all dress in the same labels. They all have Rolex watches and other things. They all go to the same restaurants. They all go on vacation to Saint-Tropez, Ibiza, St. Barts, Aspen. They all know each other, and they all know us. You want to know about brand awareness and why we're confident? Okay, because the people that buy the other great luxury brands, they know about us. We're the only high-end brand of our kind in the world. Everybody else is just a category player. They just sell sofas, or they sell lighting, or they sell this. We're the only one of our kind. The opportunity for us when you think about growth long term is when we start opening countries. That's like us coming to America and being relatively well-known at the market segment that you're targeting, and opening a gallery in New York and opening a gallery in L.A. or something like I can maybe compare that to Paris and London, right? Then open the whole internet to the whole market, and you go like, you don't think about it as stores. You don't think about it as markets. You think about what could the United States generate if I had a store in New York and L.A., amazing stores in New York and L.A., and they knew my brand. All of a sudden, they have a website, and I've been wanting to shop from them for years. I've had to fly to America, buy stuff, find a container shipping company, and ship it myself. I think there could be a run on the house here when we go international. I think it's going to be better than anybody else's model who stepped across the pond. That's helpful. My follow-up question is, I guess we're all trying to figure out what sustainable demand is, and when will we know what sustainable demand is. Can you replay the clock or the calendar for us last year, this year, February demand, and we assume that was core demand, was up 73%. Last year was up 8%. Yeah. February last year was 8%, up 8%. How did March unfold to give us some sense? March, yeah. February last year was 8%. We told everybody it was up 8%, I think before the world fell apart. February is up 8%, and it was kind of right where we thought it should be. We're up 73% in the core business on top of 8% last year. In the first two weeks of March, I think we were up 4% one week and down 3% the other week, so we were kind of flat or up 1% in those two weeks. Against the flat first two weeks of March, we're up 96%. Okay. Yeah. The way to think about it, if you said, okay if you neutralized the eight on February, you'd add 8 points to the 73%, you'd be up 81% and 96% is the way, if you want to kind of stabilize the two months. Very helpful. Thank you. Of course, yeah, then we're up against all the closed galleries and closed restaurants and closed outlets. Remember, our outlet business when it closed, it doesn't have a website. We went to zero on the outlets. We went to zero on the restaurants. In our core business, RH Core business, and in our contract business, we could still take orders and stuff. Obviously, the contract business, the longer we got into the pandemic, and people realized that hotels and everything were going to be closed for a long time, that business really took a hit. Our outlet business for a period of time went to zero, and our restaurants went to zero. Think about big pickups in our restaurant business year-over-year, big pickup in our outlet business year-over-year, and a big pickup in our contract business year-over-year because the hospitality is now starting to spend again. They're now betting for the comeback cycle. Hotels are reinvesting, buying new outdoor furniture, things like that. Hey, Michael, it's Jack. Do you think Can I? Go ahead. Do you think it'll be kind of May, June, the economy will be reopened, you'll have some reasonable comparisons, and then you'll get a sense for what the run rate of the business is? It might take longer than that, Michael. We started comping up pretty good in May and June. In the fall season, we peaked, I think, August, September, Jack, 45% and 47% or something like that in the core business. 47% in August. 47% in August. 46% in September were the core numbers. Okay. Yeah. We kind of peaked in there, and then we had a bit of a slowdown in the Q4 period. Some of that in Q4, we had more kind of clearance merchandise that we were moving through last year. That probably brought our growth rates down a bit year-over-year. We've said more stuff. We were transitioning some of our floors and other things, so we had some things that we were moving through that gave us a little extra revenue. I think that the real question, Michael, is this kind of accelerated lift that started the last two weeks of January. Right? The last two weeks of January, we started to see an acceleration, up into the 50s and 60s, and then it went into the 70s in February, and then the first two weeks of March into the 90s. That's kind of unexplainable. This is how we think about it. We think about it more, forget the percentage lift, we look at the dollar trend of the business. We've got a dollar trend of the business. The dollar trend of the business, unless there's a real economic move here, like if nothing happens, my sense is the dollar trend of the business could soften in the second half, but I don't think it's going to collapse. Right? I think that's probably other people in the home business are looking at that and saying, "Yeah, the dollar trend might swing 10, 15 points, maybe even up to 20 points." I say to him, "If we roll this dollar trend out, we think the year could be unbelievable." We think there's going to be some kind of slowdown. It's not so much the comp slowdown, it's the dollar trend. The dollar trend right now is much higher than last year's dollar trend when we were running up 40%. Like in February, March, right? That means it could be a really good year for everybody in the home sector. That might just mean some people like the headline, like Stronger for Longer. I don't know if that one's yours or someone's got the Stronger for Longer thing, I think that could be true. This thing could carry us through 2021, it could go through 2022. None of us know. We're not building a cost structure for that. We kind of say inside our company, let cost chase sales. Don't ever have sales chase costs. You'll always be behind. I think that the other positive people are going to get out of this is, for the most part, I don't think too many companies are building the cost structure based on the trend. Everybody's going to get kind of more leverage during this period of time. We're all trying to figure it out. We're all trying to figure it out, and for us, it's just understanding where is our fundamental business, with or without a pandemic, so we can think long term and invest long term and kind of be ambivalent about the pandemic, kind of like we're ambivalent between online or stores or whatnot. We don't care about the channels. We really shouldn't care about the pandemic. We need to look through the pandemic, and past this pandemic to invest intelligently for the future. That's very helpful. Thank you. Michael, it's Jack. I did want to just add one point when you asked about H2 profitability, just not giving specific direction here, but if you think about advertising, just want to clarify. In 2020, we mailed books in the spring but not in the fall, so most of the spend happened in H1 versus H2. Obviously, the opposite's going to happen. This year, we'll clearly mail an outdoor book, but the main books are going to be mailed in the fall. You are going to have a flip-flop of advertising. It's a big shift of advertising that we should probably kind of map that out for people so they can get their models right. Yeah. Yeah. Your next question comes from the line of Brad Thomas from KeyBanc Capital Markets. Your line is open. Hi. Thanks for taking my question. Gary, I was hoping you could tell us a little bit more about the World of RH. Is this going to be a redesign of the RH website? Is this separate? How do you think about making your web presence better as a transactional site and the importance of that? I just need more color on the World of RH. Yeah. It's really a rebuild of the entire website and kind of digital platform of the business. It's just starting from scratch, thinking about it across all the dimensions of these kind of new aspects of our business and brand and think about it beyond just a website, but we think about it as a portal into the World of RH that can take you through to our products, our places, our services, our spaces. Right? You know all the products and categories. We have RH Interiors, RH Modern. We have RH Contemporary coming. We have RH Baby & Child. We have RH Teen. We've got RH Outdoor. We've RH Rugs, RH Beach House, RH Ski House, RH Color is coming. RH Couture is coming. RH Bespoke is coming. When we look out and we think about just the product world of RH, how do you architect that? How do you have someone navigate through that? How do you get credit for all of that on a flat screen, right? When you think about our places, it's really our RH galleries, our RH Guesthouses, our RH restaurants, and our RH Residences. Right? Those are all our places. Thinking about how someone can navigate through those areas. How do you get a reservation at one of our RH restaurants? How do you connect to the RH Guesthouse? How do you learn about the RH Residences that we're either selling right now or we have in development? How do you look at our galleries and what are the aspects of the different galleries and explore galleries online and maybe in a three-dimensional way walk through a gallery, like walk through the New York gallery like you're there, or be able to shop the New York gallery online like you're in the store. We're looking at technology on multiple levels to be able to create the right kind of experience and interaction. That's our products, that's our places. Our services, as we think about them today, we have interior design services. We also have our contract business, which is a service driven business. Long term, we think we can be in the architecture services business and the landscape architecture services business. We think about services as a services platform, installation services business, all kinds of things that we can do that can amplify the brand. Our spaces are kind of a unique view into kind of spaces of RH, which deal with RH3, our luxury yacht, RH1 and RH2 are today our corporate planes, but they'll soon be on the website and you'll be able to charter RH1 and RH2. No one's really even seen our planes, but we design them with the vision of they're going to be part of the ecosystem. Again, we're trying to build a luxury brand, and you think about the very top of the pyramid and I say you kind of go from buying homes and then you go up the luxury mountain, and you buy a lot of homes and then you get really rich and you buy a jet, and then you get kind of silly rich and you buy a yacht, right? That's the hierarchy of spending in that world. You're going to see RH1 and RH2, which, if you ask Gulfstream, they would tell you that RH1 is the most beautiful plane they've ever built. They've done things that have never been done because we challenged them and helped them think through how to do things. In fact, when the head of Gulfstream was telling me after a long, what'd we have, a 12-hour meeting there, till 2:00 A.M. with their engineers and everybody, and they said, "Okay, Gary, look, we're doing a recap. I'm going to send you the upcharge for that custom galley that you designed." I said, "That's great, Mark, and I'm going to send you my design fees for that custom galley that you're going to want to sell to other clients." We know a lot about plane design right now. We know how to design a beautiful plane. We have just kind of redesigned RH3 and it'll be ready for prime time here in about a month. You're going to see a beautiful yacht. You'll see other things and other spaces will evolve in this kind of really rich world and content. You may see documentaries on the World of RH that talk about the building of or the designing of something, and things that our people are really interested about who are into design, into spaces. Lots of layers to it. A massive upgrade in just the consumer experience for just buying product, right? Massive leapfrog as it relates to that. That's great. Thank you, Gary. A modeling question for Jack, just as we think about rising raw material prices and freight prices that many in the industry are seeing, could you give us any sense of how we might think about that impacting the model? Obviously, you all have pricing power, you demonstrated that, does that have any impact on how we should be thinking about the model this year? Let me just jump in for a second. Again, I'd point you to the fundamental point that our goods are a lot more expensive, right? As a percentage of our sales, those factors are going to be a lot less, right? Start with we sell a Cloud sofa, $10,000-$12,000, $10,000-$14,000. The freight on a $10,000-$14,000 sofa is a lot lower than the freight on a $2,000 sofa. As a percentage. As a percentage to sales, right? You got to start with will we be impacted? Sure. Will it be to a much smaller degree than if you're CB2 or West Elm or something like that? Pottery Barn or Crate & Barrel or places like that. You have to look at the price structure of the goods. Again, if we're using about the same amount of wood, but our product is just designed much better and it's a higher quality product and it's going to be a smaller percentage. That's why you don't hear us talking about it as much, because the impact at this point is less, and it's in our model. Thanks so much. Your next question comes from the line of Tami Zakaria from JP Morgan. Your line is open. Hi. Thank you so much for taking my questions, and congrats to the entire team on the very strong results. I do have two quick questions. The first one is could you share some details on the distribution center that's coming up live, in terms of what would be the incremental rent or incremental operating expense to run it, or the incremental CapEx to build it? Any details around that would be helpful. Yeah. It's all in our model. I don't know if we're disclosing individual rents of DCs and stuff like that, but it's all in our model. It's all in our projections. It's all in our plan. The CapEx is modest as it relates to the $250 million-$300 million? Yeah. It's a non-event. Like anytime you have a DC, there's a little step-up year. We're in a step-up year, but we're absorbing that cost, and so it's probably in the first year, it's a bit of a drag on occupancy. By year two, year three, we'll start getting leverage on the property, right, versus the step-up. It's in our models, it's in our projections. Got it. That's a great segue to my second question. I did want to go back to that comment that you saw 750 basis points of operating margin expansion in 2020 on 8% of revenue growth. For this year, you're guiding to 100- 200 basis points on top line growth of 15%-20%. Are you being conservative? Because I would think there should be natural leverage from all those dollars of sales going through. Is this just for being conservative, or are there any one-time expenses that are pressuring this year and should go away next year and the years to come to help us sort of understand why operating margin expansion would only be 100 - 200 basis points on 15%-20% sales growth? Yeah, I would just kind of look at history here and ask yourself, are we generally conservative? Are we generally aggressive on our projections? Right. You can draw that conclusion, right? The comments I made earlier, we wouldn't say a minimum of 15%-20% growth and 100 - 200 basis points unless, obviously, history would tell you here, if you just looked at the last, I don't know, X number of years, that we're relatively conservative in how we guide. We generally outperform our expectations, especially the ones we give at the beginning of the year. The question here is will there be a big economic change? Nobody knows that. Will there be a recession? Will something else happen? Nobody knows that. If not, we feel more optimistic than pessimistic about things right now. We tend to underpromise and overdeliver. Got it. That's super helpful. There's really nothing one-time or sort of unnatural something impacting this year. It's just being prudently conservative. You can frame it that way, yeah, essentially.. Got it. Great. Thank you so much. I wouldn't say that was wrong. Great. Thank you. Thank you. Your next question comes from the line of Cristina Fernandez from Telsey Advisory Group. Your line is open. Hi, good afternoon. Two questions and hopefully quicker ones. The RH In-Your-Home, which you commented a couple of times, you've been testing it for some time now, only in California. I guess, what do you think you still need to improve to be able to roll that out across the U.S.? Yeah. I think we've only been testing RH In-Your-Home for how long, Fernando? A year? Three months. Three months. Oh, no. Full test, three months. Yeah. This is a whole another level of kind of Yeah, we've been talking about it for a year. Testing it for three months. Yeah, we've never really talked. I don't think we've really talked to you in a detailed way about RH In-Your-Home and Furniture Ambassadors and Are they in the Teslas or anything yet, or? Not yet. Not yet. We'll soon have You're going to have this gray RH truck and Furniture Ambassador in a separate Tesla car, gray car. They don't have the Teslas yet. I thought they might have the Teslas, but we probably got them on order. It's a whole different experience, right? It's like sending a highly trained Furniture Ambassador into the home with our delivery team, right? That is managing the whole process with the customer, that is upselling in the home, that is doing all kinds of things. If there's a problem, we solve it immediately. The stress for the customer goes down. It's a completely different experience. It's a different investment. We're testing it. Obviously, you're putting another person on the road and a relatively high-paid person we're sending in the home, right? Almost an interior designer quality person, Furniture Ambassador in the home. Okay, thanks. The other question was on some of the new businesses, RH Couture and RH Bespoke. I feel like today's the first time you've talked about those. Can you give us some details or what your vision for those businesses are? That's all I'm giving you. I would just take the words themselves and use your imagination. Got it. Thank you. Your next question comes from the line of Peter Benedict from Baird. Your line is open. Well, hey, guys. Listen, most of my questions have been asked and answered. I just wanted to wish Gary a happy anniversary. Thanks, Peter. Yeah. Well, let me sneak one in, Gary, just very quickly. The new DC in Southern Cal. I know you guys had closed one a few years ago. I just don't know if this is just the business now getting bigger, so you need it now. Is there anything different you're doing with that DC versus what made the one you had previously? That's my only question. Thanks so much. Yeah. It's really kind of an investment. I think about it as an investment into the outdoor furniture and special order business. It's architected for those two businesses, designed for those two businesses, and ability to leverage those two businesses, and run them in a more focused way to kind of get a better customer experience, grow those businesses, and service those businesses better. Before we just had a full DC in Southern California with kind of redundant DCs in Northern and Southern California. You'd have things like, for example, most of our outdoor furniture is coming out of, teak's coming out of Indonesia and metal furniture coming out of different parts of Asia, Vietnam, China, things like that. Every major container ship that's coming in is first stopping in Southern California and then going up to kind of Oakland, the Port of Oakland. You pick up seven days immediately right there. Just the way we're going to handle and process and cross-dock those businesses just to speed to the consumer. If you think about the outdoor furniture business, Southern California is our largest outdoor furniture market by far. The southern states are a lot of our strongest, very logical. The ability to get the goods delivered faster in the biggest markets, and hit the southern states faster, think about the trucking lines. Our businesses, the reason we can do this, not everybody can do this, is our businesses are really big, right? Like our outdoor furniture business is a real business. I think our outdoor furniture business is bigger than some of our biggest competitors today at the high end, right? Like if you took some of the, y eah, by far. Just outdoor against their entire business. Like we're having an internal conversation here. Think about who you might think of like a higher quality national brand or something like that. It's a real business, right? That's the great thing about starting to have scale like this. It can allow you to kind of segment and focus on businesses in a very unique way and optimize those businesses like you only ran that business. If you think about the special order business, it's a completely different business, got a different model. How do we run that business in a much more efficient way, better customer service, faster delivery, things like that. It's really an investment. We've been talking about this internally for a long time, investing into those two businesses. Okay. Makes sense. Thanks for all the color. Good luck. Yeah. Your next question comes from the line of Zach Fadem from Wells Fargo. Hey, Gary. Quick one. One thing you haven't mentioned today is the art curation initiative with General Public. Just curious if you could talk about this a little bit and how you see fine art as a potential opportunity for your business. Yeah. Well, this is an idea that Portia de Rossi came to us with, and she's really the entrepreneur behind it, and she figured out the technology and the 3D printing, or what does she call it? It's called Synograph. Yeah, Synograph. It's like a 3D printing. You can look at a beautiful, textured, hand-painted piece of art, and it replicates it perfectly. You'd need a real art expert to be able to tell the difference. Her and her partner, Ellen DeGeneres, they're big art collectors. They've got great taste and style. Their homes are fantastic, and they just have incredible taste in art. I think Portia is an art history major. It was one of the things she studied, and she's just very smart entrepreneur, and she had a big idea about this, and she kind of came through some friends, made a connection to talk to me about, "Hey, here's my idea, and this is what I'm doing." She had just kind of gotten started, and we loved the idea. We loved her taste in style, and we said, "Look, we think we can be the platform that can amplify your idea. We'd be your best partner." That's what we've done. She's working on ramping production and expanding the assortment. The great thing about Portia is you just always know what she's going to show you're going to want to buy, because she's got such incredible taste. Except I say she's probably listening to this conference call with those dog paintings. She came to me a few years ago. I know, I was joking around. Actually, now I really like them. I think we're going to probably ask them, but I'm just joking around in case she ever hears this conference call. No, I think it's an incredible opportunity for us when you think about all the walls in a home and all the opportunity. There's more square footage on the walls than there is on the floor. It's one of the reasons why initially years ago, some of you may remember, we tried RH Contemporary Art, and then we pulled back, and we may try it again. The tough thing about RH Contemporary Art was you only get to sell the item one time. If you had a best seller, you had a great piece. That transfer of happiness happens one time, and then you're like, "Okay, we sold it, and then now what do we do?" I got 1,000 people that want that piece of art, and I sold it. The great thing about Portia's strategy, she said What's her line? Great art. It's General Public. I can't remember. She has this whole great view about it is. Oh, her thing is this. Imagine if the great books in the world, there was only one. That you couldn't publish another copy. That was her whole thing. I thought that was just brilliant. Imagine every book was just a collector's item, and only one person could have that book. It makes no sense, right? Her idea, and the great thing about her, she's tremendously persuasive. She's great with all the artists, because a lot of the artists are trapped in the old school of, "I made this, and that's my piece." Now this one person in the world owns that piece. It's kind of goofy when you think about it. It'd be like a fashion designer designs one dress or one coat, and no one else could enjoy that except for one person. She's got this different view in the way she's framing it. Her and Ellen are really credible art collectors, and they've got incredible taste, and they've been advocates for the art community for a long time, that people trust her. I think she's breaking through, and she's getting better and better people on the platform. She's convincing them why only print one copy of your work? Great novels, there's not just one copy, right? People are starting to get that. I think it could fundamentally change the art world permanently. That's the idea. Appreciate the color. Thanks, Gary. There are no further questions at this time. I will turn the call back over to management for some closing remarks. Great. Thank you very much, everybody, for your time and attention today and your interest in our business and brand. We know it's been a crazy and difficult year. We just want to thank all of you, thank all of our customers, thank all of our people around the world that not only just work for our company, that work on behalf of our company, making the products and delivering the products and making the supply chain work. This has just been a year like none of us could've imagined. A lot of people made a lot of sacrifices and took a lot of risk to keep everything going in this world. We sure are thankful, and we couldn't be more excited about the future and about the opportunity. Thank you, everyone, and we look forward to talking to you at the end of the first quarter. Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect.