Product Innovation and Merchandise Planning Strategy We believe that our differentiated multi-brand strategy is a key driver of our continued year-over-year net revenue growth and comparable sales growth. Each of our exclusive brands is treated as an independent label and is supported by our own dedicated in-house design team focused on creating beautiful, quality products that align with the unique positioning, look and feel of each brand. In addition to creating new exclusive brands, we continue to innovate our products by broadening our assortment across categories and styles - some examples include the development of leather, denim, intimates and extended sizing opportunities. Our demand-driven merchandise planning, buying and inventory strategies have been developed and refined for more than three decades, and are designed to ensure that we have the right product, at the right time, at the right price, in the right quantity and in the right place. Currently our product costs have been pressured by higher raw material costs and the effect of new tariffs. Sourcing and Production We contract and maintain direct relationships with a diversified base of independent suppliers and manufacturers for our exclusive brands, which provide us with the flexibility to source high quality materials and products at competitive costs. We source the majority of our raw materials directly from suppliers and manufacturers, located primarily in China, Japan, Italy, South Korea and France, which we believe to be best-in- class that uphold our standards for quality, lead time and cost. Our finished goods are sourced from manufacturers located primarily in China, Vietnam, India, Romania, Sri Lanka and Cambodia. Capacity planning with our manufacturers is done at the beginning of the season to ensure flexibility. We believe that our approach of sourcing a majority of our raw materials and working directly with suppliers and manufacturers enhances our ability to create beautiful and high-quality products in a timely manner. We engage third parties to inspect our manufacturers' factories to ensure quality control. We engage independent expert service providers to conduct factory audits for compliance with local laws and regulations and global standards. Within the Management's Discussion & Analysis (MD&A) in the 2020 Annual Report, find the paragaph titled "Sourcing and Production" starting on page 25 and the paragraph titled Product Innovation and Merchandise Planning Strategy' on page 24. In your own words, explain what these two paragraphs tell us about the company's operations. Please don't explain every sentence individually. Read each paragraph and provide an overview of the content. Product Innovation and Merchandise Planning Strategy We believe that our differentiated multi-brand strategy is a key driver of our continued year-over-year net revenue growth and comparable sales growth. Each of our exclusive brands is treated as an independent label and is supported by our own dedicated in-house design team focused on creating beautiful, quality products that align with the unique positioning, look and feel of each brand. In addition to creating new exclusive brands, we continue to innovate our products by broadening our assortment across categories and styles - some examples include the development of leather, denim, intimates and extended sizing opportunities. Our demand-driven merchandise planning, buying and inventory strategies have been developed and refined for more than three decades, and are designed to ensure that we have the right product, at the right time, at the right price, in the right quantity and in the right place. Currently our product costs have been pressured by higher raw material costs and the effect of new tariffs. Sourcing and Production We contract and maintain direct relationships with a diversified base of independent suppliers and manufacturers for our exclusive brands, which provide us with the flexibility to source high quality materials and products at competitive costs. We source the majority of our raw materials directly from suppliers and manufacturers, located primarily in China, Japan, Italy, South Korea and France, which we believe to be best-in- class that uphold our standards for quality, lead time and cost. Our finished goods are sourced from manufacturers located primarily in China, Vietnam, India, Romania, Sri Lanka and Cambodia. Capacity planning with our manufacturers is done at the beginning of the season to ensure flexibility. We believe that our approach of sourcing a majority of our raw materials and working directly with suppliers and manufacturers enhances our ability to create beautiful and high-quality products in a timely manner. We engage third parties to inspect our manufacturers' factories to ensure quality control. We engage independent expert service providers to conduct factory audits for compliance with local laws and regulations and global standards. Within the Management's Discussion & Analysis (MD&A) in the 2020 Annual Report, find the paragaph titled "Sourcing and Production" starting on page 25 and the paragraph titled Product Innovation and Merchandise Planning Strategy' on page 24. In your own words, explain what these two paragraphs tell us about the company's operations. Please don't explain every sentence individually. Read each paragraph and provide an overview of the content
