Roots Corp

TSX:ROOT

Earnings Call Transcript 2021-Q3

[Operator]

Good morning. My name is Casey, and I will be your conference operator today. At this time, I would like to welcome everyone to the Roots Fiscal 2020 Third Quarter Conference Call. [Operator Instructions] On the call today, we have Meghan Roach, Chief Executive Officer; Mona Kennedy, Chief Financial Officer; and Kristen Davies, Head of Investor Relations for Roots. Before the call begins, the company would like to remind listeners that the call, including the Q&A portion, may include forward-looking statements about current and future plans, expectations and intentions, results, level of activities, performance, goals or achievements, or any other future events or developments. This information is based on management's reasonable assumption and beliefs in light of information currently available to Roots, and listeners are cautioned not to place undue reliance on such information.Each forward-looking statement is subject to risk and uncertainties that could cause actual results to differ materially from those projected. The company refers listeners to its fiscal 2020 third quarter management's discussion and analysis and/or its annual information form dated May 29, 2020, for a summary of the significant assumptions underlying forward-looking statements and certain risks and factors that could affect the company's future performance and ability to deliver on these statements.Roots undertakes no obligation to update or revise any forward-looking statements made on this call. The fiscal 2020 third quarter earnings release, the related financial statements and the management's discussion and analysis are available on SEDAR as well as on the Roots Investor Relations website at www.investors.roots.com.Finally, please also note that all figures discussed on this conference call are in Canadian dollars, unless otherwise stated. Thank you. Ms. Davies, you may begin your conference.

[Kristen Davies, Head of Investor Relations]

Thank you, operator. Good morning, everyone, and thank you for joining us. Meghan Roach, our Chief Executive Officer, will discuss our fiscal 2020 third quarter operational performance. Then she will turn the call over to Mona Kennedy, our Chief Financial Officer, who will discuss our financials in greater detail, after which, we will open up the call for questions. Meghan?

[Meghan Roach, CEO, President & Director]

Thank you, Kristen, and good morning, everyone. I hope you are well and your families are staying safe. Although Roots continues to experience the impact of COVID-19, I've been happy with our progression in the face of the pandemic. We had a strong quarter, driven by improvements in our in-store performance and the continued strength of our e-commerce business, combined with our disciplined approach to promotions and cost management. Our performance this quarter is a testament to the strong fundamentals of the business. Undoubtedly, Roots is a beloved brand with a product assortment that resonates with customers and strong omnichannel capability.In-store traffic in the quarter remained below pre-pandemic levels. However, customers returned to our reopened stores with a strong intent to purchase, driving up overall conversion rate. Our historical investments in our omnichannel platform also continue to pay dividends with e-commerce delivering impressive growth.In addition, our disciplined approach to promotional activity, focus on cost controls and operating efficiencies at the distribution center were important factors in our year-over-year bottom line improvement.Focusing on our omnichannel assortment specifically, it has been apparent that in the current environment, giving customers the flexibility to shop with the best, in a way that best suits their needs, whether that it's online, in-store or a combination of both has become even more important. As mentioned in previous quarters, we have the ability to ship to home, ship to store, ship from store or allow customers to pick up from curbside.In addition, our shared inventory pool for retail and e-commerce at our distribution centers has allowed us to more easily manage shift in customer demand across our channel. This allowed us to service the 40% increase in e-commerce revenue during the quarter.Our customer passing through peer store, all these locations were opened during the quarter. We were operating with strict health and safety measures in place, which included caps in the number of people in the stores and reduced hours of operation. Despite these obstacles, the store teams drove impressive increases in both conversion and average basket size.During the quarter, we also took advantage of more affordable rent and the greater availability of short-term leases to open 4 pop-up stores that showcased our extensive children's offering. While each location is near an existing Roots store, they generate incremental sales as a result of our ability to present our full assortment of kids products. Going forward, we will continue to install pop-ups as we believe they represent a low-risk, high-reward approach to showcase recent products and collections, capturing event-driven and seasonal traffic and testing new markets.From a product perspective, we have seen a rapid casualization of the North American wardrobe over the last 9 months. In the last 47 years, Roots has offered comfortable and high-quality products that has an essence of style sought by our customers. For those consumers seeking versatile options for today's new reality of work and life, Roots continue to be well positioned.During the quarter, we saw increased demand for our core favorite as well as strong sell-through of new products, which supported our continued focus on being more disciplined around promotional activity. In addition, we released our limited edition collaboration with OVO, which sold out quickly across the OVO e-commerce site and international store network.From an operational perspective, the investments we made to scale up our distribution center capabilities are having a meaningful impact on the business. However, it is important to remember that each Roots store can also serve as a fulfillment hub, which allows us to offer ship from store and buy online, pick up in-store capabilities as well as our newly introduced same-day curbside pickup.The operational competencies we have developed in the retail channel around order fulfillment, particularly in the past few quarters, will certainly prove beneficial this holiday season. At the DC, we had another quarter of successfully fulfilling substantially higher order volumes while maintaining strong health and safety protocols. We also captured significant year-over-year cost efficiencies that are growing orders faster and more actively. In addition, our consolidated inventory facilitate less order splitting, resulting in greater shipping efficiency.Aside from our financial and operational activities during the quarter, we continue to focus on ways we can give back and stay closely connected to our communities. Year-to-date, we have donated more than $1.5 million in products to support our local community, including approximately $1 million in product donations to Brands for Canada to the Canadians living in poverty, and around $500,000 in donations to hospitals and frontline workers.In addition, we have leveraged the success of our non-medical mask sales to donate approximately $350,000 to local charity, including the Frontline Fund, Black CAP and the Holland Bloorview Kids Rehabilitation Hospital and is launching the new product line in April. During the holiday season, we have committed our mask sale donations to True North Aid, an organization dedicated to serving and supporting northern, indigenous communities in Canada.Since our last call, we've also made good progress towards our commitment to continuing to celebrate diversity, inclusion and equality at Roots, including establishing a Diversity, Inclusion and Equality Council. The council comprise of individuals from across the organization, including stores, our head office and our distribution center. I am also a member of the council and there are many members of senior leadership team, given the importance of this to Roots and me personally.Together, we have been building the framework for diversity, inclusion and equality at Roots, in connection with our broader business strategy, which will also include training and measurement tools to access our progress. While making lasting change will invariably take time, we look forward to continuing to update you on our progress. This is an important focus for us, and we are committed to keeping the momentum going.One of our notable initiatives in this quarter was our campaign with the Holland Bloorview Kids Rehabilitation Hospital. Following our signature of the Dear Everybody agreement earlier this year, our back to school imagery included many of the amazing children induced with disabilities who benefit from all the hospital had to offer.The entire team is also excited about our recently launched holiday campaign. It celebrates the Roots community in a truly genuine and heartwarming way, a particularly amazing accomplishment for the team given the COVID-19 restrictions they are working around.As we mentioned, in the fourth quarter with new government restrictions placing even tighter limitations on retail store operations in important markets across Canada, we'll continue to do what we have done since the beginning of the pandemic, focus on controlling what we can and thoughtfully responding to that which we cannot.We continue to believe customers will seek out trusted brands like Roots for their holiday shopping. We have a compelling product portfolio, strong omni-channel capabilities and a deep commitment to our community. While we will likely operate in a period of uncertainty for some time still, we'll continue to manage in the near-term while keeping our eyes on the long-term opportunities.Despite the challenges faced by our business due to COVID-19, the Roots team has continued to pivot and adapt to the new realities of our operations. I want to thank the entire team for all of their hard work. It is an immense privilege to work alongside them every day.On that note, I will pass it on to Mona to discuss the financial results for the quarter in greater detail. Mona?

[Mona Kennedy, Chief Financial Officer]

Thanks, Meghan, and good morning, everyone. As Meghan noted, we're pleased with the business recovery we saw in the third quarter. While total sales continued to reflect the impact of COVID-19, we saw a healthy ramp up with sales decline narrowing significantly in comparison to Q2. Total sales in the quarter were $72.9 million, down 15.5% from $86.4 million last year. This was compared to a 38% year-over-year decline in Q2.Our decline in store sales was partly offset by stronger e-commerce performance, with us recording DTC sales of $63.4 million, down from $73.9 million last year. Online sales were up more than 40% compared to the third quarter last year. However, year-over-year growth reached as high as 150% in non-promotional periods.On the Partners and Other sales front, sales were $9.6 million, down from $12.4 million last year. This was primarily a result of COVID-19 related declines. In terms of our Asia partner business, we're encouraged by the recovery we're seeing. It is predominantly driven by Taiwan, where we have a long-established presence. China is a comparatively newer and still small part of our business.Now turning to gross margin. We produced our best Q3 DTC gross margin in some years. At 63.8%, our DTC gross margin increased 490 basis points over the 58.9% we recorded last year. Throughout the year and also in the quarter, we continue to take a more strategic approach to promotions.With a clear understanding of our strong performance, we have continued to move away from storewide discounts, excluding our heritage collections and our best sellers from our promotion. We also continue to test consumer response to lower discount rates, which you may have noticed during our annual back to school sale this year.Additionally, we have stayed agile in a tactical approach by closely monitoring sell-throughs of our products and adjusting our strategy according to the consumer buying trends we're seeing.We have seen continued success over the last 3 quarters as a result of this change in our promotional strategy. While this shift is likely placing some downward pressure on sales in the short term, we believe it is beneficial to the brand and profitability of the business over the long term. We're confident we're taking the right approach.As we go into the fourth quarter, with new store closures, we will remain nimble. We'll respond appropriately to near-term market conditions, taking the necessary steps to effectively manage inventory levels, especially as the fourth quarter is already a non-promotional period of the year industry-wide.DTC gross margins in the quarter also benefited from the increased efficiency at our distribution center that Meghan discussed. We continue to manage our expenses tightly, while closely monitoring our top line performance. We recorded $26.6 million in selling, general and administrative expenses for Q3 2020, down from $40.7 million last year. Of the $14.1 million decrease, $8.9 million was related to COVID-19-driven cost reduction effort.We finalized agreements with landlords for rent abatement, which accounted for $4.5 million in total savings. We realized personnel cost savings as a result of reduced operating hours and labor managed in accordance with store sales. And we benefited from a reduction of corporate costs in numerous other areas of the business.In addition, we realized $2.5 million in savings as a result of the permanent closure of 7 of our U.S. stores in Q1. In the quarter, we also benefited from $3.6 million in government wage subsidies. We recorded $2.7 million in SG&A, $0.5 million as a reduction to COGS and $0.4 million in capitalized labor at our leather factory.While some of our cost reductions are isolated to this quarter, particularly the magnitude of rent savings we obtained, there are others we plan to continue to carry forward. The current environment remains challenging. So we will continue to carefully manage our expenses, look for areas of cost reduction and leverage government support and subsidy program.Driven by gross margin expansion, cost savings and the benefit of government wage subsidies that have offset a decline in sales, we reported adjusted EBITDA of $19 million, which is an 80% increase compared to $10.6 million last year, which included $1.7 million in losses related to our closed U.S. stores. However, it is important to note that even without the COVID related rent abatements and the government support, we would have still seen an improvement in adjusted EBITDA.Through diligent management across the company, we generated improvements in margins and increased efficiencies in retail labor, DC operations and less shipping costs that resulted in a year-over-year improvement in contribution margin for the overall business.Now turning to inventory. Our inventory balance at the end of the quarter was $62.5 million. While this was down $7.9 million compared to Q3 2019 as a result of timing, delays at the port shifted some inventory receipts into the fourth quarter. Has this not been the case, we would have expected our ending inventory balance to have been up 5% to 10% year-over-year. This continues to be primarily a result of our pack-and-hold strategy as we're holding some inventory for sale in future quarters. As the current environment remains uncertain, we will continue to diligently manage our inventory levels and work to derisk our overall assortment in response to COVID-19.Free cash flow for the quarter increased approximately $5.4 million over last year as a result of a reduction in CapEx and improved working capital. At the end of Q3 2020, we had $45 million in our new borrowing capacity on a $75 million revolving credit facility and net cash of $11.3 million. Net debt was $91 million, down from $133 million last year. We were also in compliance with our covenant. Reflecting the ongoing global uncertainties, managing our business for near-term liquidity and cash flow remains our priority.As we look to the fourth quarter, under current provincial guidelines, we have closed 20 locations in Toronto and Peel regions, and 3 locations in Manitoba. However, we're operating the stores for curbside pickup and e-commerce fulfillment.While store closures and store operating restrictions may negatively impact the momentum we saw leading into this period, we're confident our product assortment and omnichannel capabilities as well as our proven ability to remain operationally nimble and manage cost will position us to continue to successfully execute in an unprecedented operating environment.Just before turning the call back to the operator, I wanted to echo Meghan's gratitude for the entire Roots team. I'm incredibly proud of our entire organization's ability to work together and continue to move quickly to sustain the business and maintain financial health in the face of this global pandemic.With that, operator, please open the line to questions.

[Operator]

[Operator Instructions] And your first question here comes from the line of Stephen MacLeod with BMO Capital Markets.

[Stephen MacLeod, Analyst]

I just wanted to just talk a little bit about Q4. You talked about momentum was strong. Can you just talk a little bit about how things have progressed into Q4, maybe ahead of store closures? And then what you've seen during the period of government restrictions?

[Meghan Roach, CEO, President & Director]

Yes. I'm happy to take that, Stephen. So I think if I could remind you that we had 25 stores closed during -- going into Black Friday. And despite that, we're actually very happy with our performance so far. We actively worked to smooth the demand [Technical Difficulty] sales into early November, and we saw people shopping earlier. We were really able to leverage our CRM system, our customer system, that allowed us to target specific customers in different ways. And so we actually got to just come in earlier and get our Black Friday sales earlier, which is really beneficial to us. However, the stores are closed now, and we are operating under strict restrictions in other provinces. And so that may negatively impact our momentum going to the rest of the quarter. But it's a bit too early to make a conclusion on how we're going to perform as there's still a lot of the quarter left to go.

[Stephen MacLeod, Analyst]

Right. Okay. That's helpful. And then are you able to comment -- like are you able to quantify kind of what the take-up is in terms of e-commerce and curbside pickup to offset the lower in-store sales of the 23 stores that have been closed?

[Meghan Roach, CEO, President & Director]

We won't give you a specific number. But what I can comment on is, I mean, obviously, in Q3, we said that we had very robust e-commerce sales. They were up year-over-year 40%. And I think the thing to remind everyone is we came into this having the capabilities to ship from our stores, so we always had the stores and fulfillment hubs, and we do have curbside pickup. And we share one pool of inventory. And so as a result limiting our store closures, we were still able to use the store staff to do fulfillment. And we also were able to leverage our capacity to do customer service. And so they were definitely an offset with the stores being closed but we're not going to be able to quantify an exact figure for this.

[Stephen MacLeod, Analyst]

Okay. No, that's fair. And then maybe just turning to the gross margin. And obviously, very strong gross margin growth in the quarter on the promotional -- I guess, reduction in promotional breadth and depth. Can you talk a little bit about sort of how you see that evolving as you turn the page into calendar 2021?

[Mona Kennedy, Chief Financial Officer]

Yes, absolutely. Obviously, this year, as we've communicated in the past quarters, we've been focusing on reducing our promotions through billing less deep and also less broad and excluding some of our key categories that are quite successful for us on our promotions. And it's proven to be quite successful. We're going to continue to implement that strategy across future years as we believe the Roots brand is loved by customers, and we believe that you don't need heavy levels of promotion to increase that brand love. So going into future years, we're going to continue on this strategy, but it is kind of important to mention that we're in a pretty volatile environment right now. So we have to stay agile, and we will continue to shift our strategy as needed in future quarters and also into next year.

[Stephen MacLeod, Analyst]

Okay. That's great. And then maybe just finally, when you think about SG&A, Mona, you mentioned in your prepared remarks that a portion of the savings will continue. Am I right to believe that the wage subsidies and rent abatements, will those continue into Q4 and into the next fiscal year? Or are those going to be sort of concluded by the time you exit -- having exited Q3?

[Mona Kennedy, Chief Financial Officer]

So the wage subsidy is dependent on sales declines. So the amount that we're going to be eligible for is dependent on how much sales declines we face. Our sales have ramped up in this quarter and the amount of the subsidy has obviously gone down. So how much subsidy we qualify for in future quarters is going to be completely dependent on that, and I believe it has been extended until June of next year. And from a rent perspective, we have recognized the majority of the rent abatements, but it's important to note that we're, again, experiencing some new store closures and continue to have the conversations with the landlords as we go into future quarters to ensure that we continue our financial stability and profitability.

[Operator]

Your next question comes from the line of Patricia Baker with Scotiabank.

[Patricia A. Baker, Analyst]

Just 2 quick questions. You referenced in your remarks that people are coming to -- that are visiting the stores are really coming with an intent to purchase, and so that you had higher conversion rates. Are you willing to share what the conversion rate was in the quarter? And then secondly, was the conversion rate higher in Q3 versus Q2?

[Meghan Roach, CEO, President & Director]

Patricia, it's Meghan. So we -- what I would say, I'm not going to give you the exact number as we haven't disclosed them in the past. So what I can tell you is if you look at our store metrics, conversion, absolute basket, UPT, they were all up actually compared to last quarter and year-over-year. And so we're really happy with the way those trends are performing. Traffic was really the only thing that, a lot better than Q2, continues to remain below pre-pandemic levels. And so overall, we're happy with the other store metrics we're seeing.

[Patricia A. Baker, Analyst]

Okay. Excellent. And then is there anything you can talk about Partners and Others? And any particular trends you saw in the international piece of the business in Q3 that differed substantially from Q2?

[Meghan Roach, CEO, President & Director]

I think, from a Partners and Other business perspective, obviously, Taiwan is the biggest portion of that, and China remains still a relatively small part of our business. We don't give the specific breakdown in terms of how each of those businesses perform, but we're encouraged by the recovery we're seeing. And again, it's predominantly driven by Taiwan where we have our biggest presence, and it's longest we've had this presence in the business.

[Operator]

Your next question comes from the line of Brian Morrison with TD Securities.

[Brian Morrison, Research Analyst]

My first question, last quarter, you talked about strategic focus on product and better understanding the consumer. I'm wondering if you can update us on the progress you've made with respect to that?

[Meghan Roach, CEO, President & Director]

Yes, absolutely. So I think we mentioned in the last quarter that Karuna Scheinfeld has just joined us in July. And as a result, one of the things she was focused on was really hitting the ground running and helping us elevate our product strategy on a go-forward basis. And she definitely made a lot of progress on that. So I think I'm quite encouraged by the products coming into pipeline for next year. We had some great performance of our products during the quarter already. Some of our core favorites continue to really excite the consumers, and particularly as people are continuing to work from home and looking for personal items that are having that comfort and quality that Roots would always offer.And we continue to see sell-through actually from our new products also, some categories like journey and our lounge stuff that we offer and suites also continue to perform well for us. So that's very positive. So I think we're going into 2021 with some good momentum on our existing product categories. And Karuna has really added to that in terms of new and exciting innovation you should see coming into new year.

[Brian Morrison, Research Analyst]

Okay. And then the second question -- I'm sorry, I joined a bit late, but I think you said your e-commerce was up 40% year-over-year. And I think that's a trend that's likely to continue even as the pandemic eases. And I'm wondering if you'd put any thought or additional thoughts that you can share with us at least with respect to the size of your Canadian footprint and the potential to shrink it on a going-forward basis?

[Mona Kennedy, Chief Financial Officer]

Yes, absolutely. I can answer that. So from a Canadian footprint perspective, I think one thing that's important to note is that pre-pandemic, 90% of our stores were profitable. So as we have historically done and also going into the future, we're going to continue to evaluate that footprint. And we've got the capabilities and the systems in place to actually serve our customers from an omnichannel perspective, from our stores and also through e-commerce. So the size of that footprint and the format of that footprint is going to be quite dependent on how we want to do it and what our strategy is and we're going to continue to evaluate it. And it could include closing some stores, it could include changing our approach, and it could include also the pop-ups that we've been doing in the most recent quarter. So we're going to continue to evaluate it and see how things turn out.

[Brian Morrison, Research Analyst]

So sorry, just to follow up. Are you content with your store footprint right now? Or you believe there's room for improvement?

[Meghan Roach, CEO, President & Director]

Maybe I'll add on that, Brian. So yes, I mean, we are content with our store footprint. Coming into this year, I think we've mentioned it a couple of times, we actually had less than 10% of our portfolio that was loss making, right? So we always had a very profitable and robust store base.And so obviously, things have changed during the pandemic a little bit in terms of where we're seeing traffic go. Definitely, urban city centers and tourist locations are facing different challenges than some of our other store portfolio.That being said, obviously, things are changing in the next 6 to 9 months. Obviously, as vaccines kick in and people start to go back to work, we anticipate seeing different trends in the portfolio. So we're happy with our overall store footprint.I think what Mona was mentioning is that it's a great environment for us to be agile around how we manage it. Obviously, we've a robust digital platform also. And so we're really serving the customers in the way that they best need.One of the things we did during the quarter was increase the number of pop-ups. So we took advantage of some of the shift and where the traffic is going and also allowed us to showcase more of our product portfolio. And we also obviously have been negotiating with our landlords to take concessions where we haven't seen some of the great traffic numbers.So overall, the answer is, yes, we're happy with where we are today, but we are constantly looking at it and monitoring it to determine what that looks like in the future. And Mona has really been spearheading that transfer.

[Operator]

Your next question comes from the line of Sabahat Khan with RBC Capital Markets.

[Sabahat Khan, Analyst]

Just a quick follow-up. I know you shared some color on the inventory position. I guess what's sort of your strategy to make sure, given that some of the store closures, how do you enter the next year with kind of a good inventory position to start 2021? Just some additional color on your thoughts, how you might promote or things like that during Q4?

[Mona Kennedy, Chief Financial Officer]

Yes, absolutely. We've been on top of managing our inventory quite early on. We've got a supplier base in Asia. So we started managing it starting January or February and shifted our strategies to make sure that we find ourselves in a good inventory position, and we have a flexibility to manage inventory levels. So we reduced our buys. We shifted a lot of the buys into future quarters. And as we go into Q4 -- halfway through Q4, if you like, we're in a pretty good inventory position. One of the strategies that we have implemented is a pack-and-hold strategy where we have packed some of the inventory that is our key products that customers love for future quarters. And we have plan for all of that inventory. So in general, we feel like we're in a good position. And by staying flexible, we've been able to manage it quite effectively.

[Sabahat Khan, Analyst]

Okay. Great. And then just trying to do some arithmetic on the rent abatement and the CEWS that Roots received during the quarter. I think the -- so just want to understand the capitalized amount of about $0.5 million during the quarter, just how that works? And then is it correct that, that $0.5 million is probably not backed out of the $11.3 million that we're looking at? Just want to understand kind of the -- what that number is and what's reflected in the $11.3 million?

[Mona Kennedy, Chief Financial Officer]

Yes, absolutely. So $0.5 million is labor at our leather factory that basically gets capitalized into the inventory. And as you sell the inventory, it will get recognized through the P&L. So no, it's not included into -- in the $11.3 million SG&A savings.

[Sabahat Khan, Analyst]

Okay. Great. And then just 1 last 1 from me on the e-commerce, I guess, and I'm just kind of following up on Brian's question earlier around the store footprint and where traffic is going. Do you foresee maybe the need to add some infrastructure capacity on the e-commerce side, as presumably, you'll have a greater mix of e-commerce sales going forward relative to pre-pandemic? I want to understand how you feel about your capabilities? And what else you may need to add on that front as we think about the next few years?

[Meghan Roach, CEO, President & Director]

Yes, good question. So just again, as a reminder, coming into the pandemic, we actually had very robust e-commerce sales in 2018. We were seeing in excess of 20% of our total sales coming from e-commerce -- actually coming into this year. And we already had the capabilities to do ship from store. We had the privilege to do, but it wasn't turned on at the time, but we had the capability to do it. And then we were already sharing one pool of inventory. So we already have a pretty robust omnichannel platform in place.So when we look forward to 2021 and forward in terms of where we make our investments, we'll definitely continue to make investments on the e-commerce platform because we want to continue to be best-in-class. But we are very happy with our capabilities today, and we do have a very robust situation that allows us to service our customers in whichever way they need, and even with our stores being closed in some regions.So hopefully, that answers your question, but I think as we look forward, it's really about where we can continue to improve and less about having things that we've missed in terms of our omnichannel platform.

[Sabahat Khan, Analyst]

Okay. So just, I guess, at the current level of traffic, the capacity in your e-commerce sort of infrastructure is not stretched or anything, you're kind of comfortable with where you are now?

[Meghan Roach, CEO, President & Director]

Yes, we are fully able to handle the capacity that we're currently seeing through our network.

[Operator]

Your next question comes from the line of Matthew Lee with Canaccord.

[Matthew James Lee, Associate Analyst of Telecom and Media]

Congrats on the good quarter. Can you maybe discuss your strategy around holiday sales? I mean I know you're pivoting away from promotional activity and large discounts. But given that Q4 is traditionally significant for sales across the industry and the stores are closed, could you possibly push for greater e-commerce promotions throughout December?

[Mona Kennedy, Chief Financial Officer]

So I'll take that one. So I think as we mentioned in previous calls, we had planned our promotions in Q4 to be more aligned with the industry. And by that, I mean, we did participate in Black Friday, for example. However, what we did was we continued to maintain a disciplined approach on discounts.So for example, during Black Friday, we eliminated the daily deals that we had done in previous years. We reduced the overall discount that we were offering. And then we excluded more items from the promotion. So we are continuing to play in this promotional period.There's always a cutoff from an e-commerce perspective in terms of when you can get the goods to the customers, just given the carriers' constraints also. And so from our perspective, that's actually coming up the 30th of December. And so after then, we will be looking to our stores to begin curbside pickup and doing a number of things to obviously drive traffic in our way.So we are continuing to play in some of the promotional cadence, just taking a more disciplined approach to how we do it. And then we are pretty confident in our -- again, our e-commerce capabilities to service our customers during the period of time that e-commerce is going to be a viable option to shop for the holiday period.

[Matthew James Lee, Associate Analyst of Telecom and Media]

Right. And maybe a follow-up to that. Have you done any additional surveying this year from consumers around brand perception now that you've reduced the promotional activity, and you've been more strategic about discount? I'd imagine lower discount level will drive more premium branding in terms of value to consumers?

[Meghan Roach, CEO, President & Director]

Yes. We just completed a full consumer survey last month. And we were -- and continue to be very happy with the perception of the brand amongst consumers.Again, one of the things that it tells us is we have very high NPS scores. We saw an increase actually in our overall NPS score year-over-year, which is great. We continue to see very loyal customer base. I mean, our customers -- over 50% of our customers have been customers for more than 10 years, which again is fantastic. And our product categories are continuing to resonate with them.So everything that we do in terms of testing our customers today has been very positive in terms of response. Despite the fact that we've been reducing promotions, we're seeing continued excitement around the product from our consumers and it tell us we're doing the right thing.

[Matthew James Lee, Associate Analyst of Telecom and Media]

And then maybe just a math question, just to kind of clean up some housework. You just earned $60 million to $70 million of e-commerce sales last year, I believe -- around $60 million. Does that mean given the statistics you've been seeing so far that this year could be almost $100 million of e-commerce?

[Meghan Roach, CEO, President & Director]

I mean, the last thing is not only that we disclose. So I'm going to leave it to you to kind of back into the math based on the numbers we disclosed in previous quarters. We just don't disclose on a specific quarter-by-quarter basis on specific numbers coming from that channel as we do believe that we really are an omnichannel retailer. And you can see that, with the fact that our stores are closed, we see shifts to digital and then when our stores are open, we see a more balanced approach to where people are buying. And so we really view it more as serving our customers, in the best way possible, they can come to us through any channel that they possibly want.But we don't really look at the channels in that isolation. So we don't want to disclose the specific information at this point.

[Operator]

And I'm not showing any further questions that are in the queue at this time. So I'll turn the -- sorry, I turn the call back over to Meghan Roach for closing comments.

[Meghan Roach, CEO, President & Director]

Thank you, operator. That concludes today's call, and thank you all for joining us. On behalf of the Roots team, I would like to wish everyone all the best for holiday season, even though it would likely look very different this year than most for all of us.We do look forward to having all go to our stores and hopefully continue to buy products where you can. We also look forward to updating you on our progress in the New Year when we'll report our Q4 fiscal 2020 results. So have a great day, and stay safe.

[Operator]

And ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect.