Hibbett (HIBB) 4 Mar 222022 Q4 Earnings call transcript

Greetings, and welcome to Hibbett Inc.'s Fourth Quarter Earnings Results. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Gavin Bell, Vice President of Investor Relations. Thank you.

You may begin.

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Senior to understandings March XXXX. it the call time-sensitive of archived a are of Bob Chief Ben Vice conference conference webcast Financial Officer; President management's that the Vice of on President, Digital; of XX Because Jared I'll call of Inc. Mike to of President remarks policy President Longo, Vice now to today's based Officer; replay Senior Briskin, limit information, Knighten, date, President days. are point the X, Chief this Executive Longo. and I Quinn, Lastly, over to period of as would Mike Executive call this Volke, the on Hibbett Marketing and information and The accurate like participants Vice of Operations. Bill this call the is turn nature and believed out Senior Merchandising; during and

morning, and QX call. Good to the welcome earnings Hibbett

you following of those the #X. the I'm Slide on Overview For slide slides, along entitled

weeks get As you ahead know, of X we to to information sales pre-released ago order today's you earnings and in call.

the to for you expectations and updated the and of we the fiscal results press While that believed previously, data are we gave it in quarter provides release for you Today's results. we the soon was update results below fourth to certain our guidance reasonably -- year. reflected as important provide as the our an full

QX review, results, was in comp earnings increased $X.XX. 'XX a per a plus share the diluted comp. So X.X% and of X-year sales with The FY negative a XX.X% X%

believe a handful by the the QX full positive negatively a a 'XX, We of FY diluted X-year of XX.X% earnings comp, comp share results we impacted XX.X% For year, had and factors. a $XX.XX. per of of were

and the the notably X% an versus specific an we of what last month for overall products, negative disruption inventory that comp of footwear, forecast, QX to the of was negative general that a addition X delivery quarter and XX% inventory late comp supply categories: into that inventory, cases, surge factors in resulted primary factor for in we In the fall drove income. sales in In feel affected resulted negative the of approximate shortfall most in other a quarter. the inflation the COVID-XX a category, chain biggest

lower food but The also abate the is The and into trend consumers' we the inflation QX, income fuel, to affected discretionary This begin services expected as and purchase services. things are is goods throughout effectively goods the and inflation. by year. changes will to continue to available X X top bucket housing. second These anniversary

the year, in reflect consumer this and the year, income, -- than year of bucket a lack income income blessed disposable change last year. the had caused versus a around that stimulus behavior. excess quarter less with last consumer had current few third disposable The last When in

affected And so that sales. materially

performance remind moving to over most our business want I that slide, and fiscal to And related fourth material. on sales has years everybody several historical the performance. recent financial so improvement growth the been the of

manage results we While our it's on business evaluating easy in longer-term up quarter-by-quarter the in a get for basis, mind. outlook to caught

positively new position. X last among us of to inventory take the seen the current factors driven the in business were improved other While customer factors, model, model and an changes underlying allowed and those improving improvements and also impacted in fiscal to we've by business advantage landscape that been stimulus years We has steadily the by and believe has to have experience, afforded investments in us improving opportunities retention the circumstances. the consumer competitive investments

fiscal approximately stores at one no competition have will in of of now, that X within XX% brands. key we're year, product As that our we our our reminder, beginning a from miles the the carry believe that

miles, our with factor to going stores is this in competitors you increases XX%. If success less look believe figure forward. or almost X the that X We significant a at within

expansion, the driven tables As to generating lift has can huge diluted net operating on percent in as share income per from a significant the see of slide, the rapid in growth sales. addition a earnings you sales

business merchandise to strong and us in the provides sales and position model years. As of in stated marketplace puts vendor and over differentiation a creates improved and Thank release, the the call in now Jared. the a you. in with competitive consumer I deliver morning's advantage compelling us this coming to our eyes results press profitability the in our assortment believe that and turn partners omnichannel I'll

X, Mike. turn merchandising. morning. to Please Thanks, Good Slide

mixed a had we quarter, across categories. performance fourth our merchandise the For

supply and and impressive. sports were and the results in products. expected, with by associated comps category fiscal to with than from at in chain. XX%. As the by footwear genders XXXX low-XXs. XX% up estimate sports that our launch fiscal the affected growth in apparel up our impacted All significant remain the mid-teens overall deliveries headwinds up We were in Momentum fourth when as with quarter, compared category category When apparel delays slowed approximately apparel negatively the compared team footwear the and strong team X% very were due challenges to digit to more categories double were XXXX further most

the in us premium was working toe results organization quarter consumers. the shift our littles increased how developments While we the confidence across achieved genders plan Further the our fleece, apparel merchandising our the strategic head has the and in merchandising elevating fourth and incremental mid-teens. expectations, that during the strategy, all of investments been In and that jerseys for remains in to quarter, and Key fourth serve business year below us. apparel give our we performed for denim, a business quarter. priority above are

was our performance athletic in premium fashion excellent included Our fleece. brand the tops driver footwear of bottoms and was tops monocolar brand during Denim connectivity, bottoms the and quarter. both trends matching business. and Key

Specific as well. continues mid-single to by and digits is a business digits Incremental been quarter in remains challenges regarding significantly hats a delays digits Order of denim pressured well kids lifestyle most significant Jerseys denim during the extremely this chain mid-single impacted our remains and casual footwear and footwear added to and our and the supply quarter. other trend as remain women's and running and has in fourth performed the than hot was decreased apparel, the a supply in be high. inventory. and low Men's essential basketball, quarter. upside affected programs Our improved streetwear investments improved negatively, categories. more as in category and more chain although teens. collections exceptionally during Footwear demand priority down result mid-single doubled than area the

As expected, approximately the up fourth inventory ended year. for X% last quarter

saw a latter XX to our meaningful an January. inventory the This our secure proud of estimates incredibly inventory in to impacting impact efforts days. was XX increased to December business. unexpected sales January, the deliveries slowdown During of we team's a had and of by part additional to I'm and support

closer our levels more this timing levels but level accomplish in all partners, on were able optimum 'XX the we optimal ability additional and fiscal of partners back at call priority with our now an was million our to of of get than We're first additional our fluid. to of in to as throughout supply I'll season the inventory confident incredibly norms. levels booking in by in securing reported $XXX periods continues half vendor chain pressure by through Bob the our discuss from able remains expect We the deliver our improving within own process receipts an slowdown order team chain. The secure, midst historical the current XX% to our our book, challenges, over to During to capacity to incremental processing deliveries in our of inventory. turn deliveries estimations, half vendor year. continue do Based as above cost and to improve increasing the to and well over to results. financial of year, the supply product reaching

of good Slide some fourth highlights of Jared, X 'XX. the to for morning. quarter Thanks, Please refer fiscal and

Gear consolidated basis that results both As Hibbett a reminder, City our we brands. a includes report and on the

the quarter, X-year over sales. XX.X% quarter previously. of XXXX. of but In launches. same Sales reflected fiscal million first fiscal the were fiscal inventory material number XXXX, Brick-and-mortar and quarter in fourth quarter, net the current during fourth the E-commerce impact X% flow and to Jared to X.X% X-year on over a product $XXX.X the a trends of the had accounted E-commerce for fiscal of decreased comp the footwear period noted during and XX.X% but was sales for sales quarter, of of XXXX risen fell deliveries a stack. total X of up have of XX.X% the the subsequently quarter sales X-year net compared fourth sales X.X% has This a half prior select in sales a for quarter XX.X% received the compared but fourth current sales comparison slowed the on quarter were For 'XX, years. unchanged delayed net a year quarter, quarter accounted in and sales X.X% were percentage to inventory fourth as fourth XX.X% the increased scheduled period. sales of increased of XXXX. strong increased from the versus Comparable e-commerce to that by XX.X% increase

from more GAAP the the cost benefit increased by and a net fourth lower counts throughout was period. This quarter decline was administrative performance. and is were professional additional sales result the improvement in December an XXX traffic launch month year expenses promotional prior compared wage and negative basis year. fees transaction resulting and offset transaction schedules, compared store of of in selling, with store in concerns sales employee of January. impairment net the efficient late approximate XX.X% related In basis back-office also gross declining XX.X% and services, higher XX of with to of shifting deleverage point contributed for to in approximate freight last of case XX.X% addition, comp of infrastructure XX.X% inflation expenses. advertising, management general activity, margin and COVID-XX uptick and occupancy This primarily GAAP due charges, point and sales costs expenses costs partially volume

certain and Excluding fourth to the the figure of quarter the year improvement capital quarter opportunities $X.X on prior quarter. fourth XX.X% of XX GAAP Gear sales of amortization occurred SG&A In acquisition the operating same million income we X.X% in and growth XXXX year, of prior of fiscal compared to net million compared of in reflecting year generated infrastructure of last sales expenses increased $XX.X expense XX.X%, the fourth net or Depreciation during and X% quarter, XXXX, around investment comparison adjusted to City organic $XX or projects. fiscal fourth of increased period current an million in current basis points. integration that year quarter the approximately

adjustments this earnings the in primarily In income last during any quarter, share Capital investments diluted fourth this items. adjusted year quarter, fourth did fourth compared non-GAAP not were were GAAP consisting $X.XX infrastructure diluted during of $XX.X $X.XX and nonrecurring year's were per quarter include $X.XX. of fourth diluted earnings development all were of Excluding million share last our quarter per $XX.X fiscal share to ongoing fourth for store year's $XX.X 'XX. adjusted and million operating year's per projects. million, quarter expenditures and the operating of earnings GAAP income

X which of fourth our program the fourth opened and total new reflects the $XX.X for During XX we X XXX,XXX approximately quarter, rebrand. including nearly a closed In authorized repurchase shares quarter, X purchased under also stores, rebrand share stores, million. we cost

results to move full on the Let's Slide year X.

'XX. XX.X% to XX.X% sales year, years sales and For the time sales total sales up of fiscal $X.XX over versus fiscal XXXX net fiscal XX.X% Brick-and-mortar sales 'XX. total comparable from Brick-and-mortar of comparable sales XX.X% e-commerce X.X%. decrease of XX.X%. in XX% compared to billion to increased grew sales total XX.X% increased $X.XX slight fiscal ago, in represented X the e-commerce the comparable reported were sales increased net relation billion 'XX a sales in and $X.XX XX.X%. reflected full sales and 'XX, XX.X% billion, period. net increased X-year 'XX up in increased of fiscal fiscal and to XX.X% Relative comparable during In E-commerce

For the half higher net sell-through, was GAAP result 'XX. is this compared of margin driven low in-store sales, year, a which margin of of was high margin higher to for gross environment greater e-commerce carry sales a mix which year, of than the fiscal first in sales. the promotional XX.X% performance and a by This historically XX.X%

of in gross our to 'XX, professional employee net the year with current current goodwill margin of the were sales impairment year XX.X% SG&A comparable adjustments gross lower impairment inventory related expense GAAP expenses, XX.X% This prior prior XX.X% year. XX.X% of result the including charges, by margin fiscal in the advertising in year. year Excluding cost increased prior of of the compared the reserves and and is noncash for in is to adjusted leverage services. improvement offset benefit sales partially and wage net of the

XX.X% sales in compared the expenses, integration 'XX. favorably 'XX to fiscal costs operating in Gear $XX.X produced and of impairment fiscal expense City million. of current and XX.X% net year's GAAP a expense year compares income basis, acquisition we certain pandemic-related year, income SG&A with of On that of adjusted fiscal of valuation prior Excluding net and occurred $XXX.X SG&A million last sales in of operating

operating sales earnings diluted in were or GAAP compared prior income million, non-GAAP $XXX.X to year, net of the fiscal the Excluding operating fiscal to $XXX.X $X.XX 'XX. adjustments million all for XX% is year in of of year of sales representing fiscal comparable our current $XX.XX net in adjusted share XX.X% current year-to-date income per 'XX.

adjusted prior adjustments leverage share Excluding compares earnings all per remodeled capital 'XX non-GAAP flow infrastructure million in diluted which to by invested of largely fiscal the and SG&A cash was share to fiscal year, the $XX.XX year plus margins in sales, robust of stores in operating of in earnings expanded and strong Driven relocated, generated we new, $XXX.X of $XX.X per diluted $X.XX this XXXX. and million related expense, projects. various

nearly cost our via out authorized and shareholders. million fiscal quarterly was that buyback million a at in X.X total program we million of our shares in paid have fiscal $XXX.X June cash million share repurchased We almost 'XX. recurring 'XX, $XX returned to During dividend $XXX.X regular of initiated under

to the million. We with in cash balance equivalents, Turning year's the year down of is the ending sheet. cash $XXX.X from $XX.X ended balance million which previous and

of repurchases and during year. the As noted share expenditures, dividends uses were cash previously, significant capital

strengthen previously, year. inventory our to and vendor the collaboratively borrowing year. the we worked position. us with from remained million, relationships partners year Net capacity vendor beginning and of community at million $XXX have continue $XXX.X our increase entire entire made the of strengthen Consistent a with our of at the end X.X% build fiscal Our we the available ended the to inventory with to have comments

customer our from XXXX then Bill. Before example to we little guidance, and provide and will to organization dig elements it executing transformed represent are we apart provide feel into we our set real-life discuss hand into now our a years. upgraded competition I'll Ben insights we way that in-store we want strategy, the the a experience. elevating of of Knighten the have how last the and off Quinn Bill fiscal deeper and couple our in will of digital some and us

morning. Good Thank you, Bob.

many that the was levels. years, programs by couple last our of customer back retain Looking pre-pandemic This accomplished rebased metrics above engage of customers. over improving have and

include program, revamping process, Some loyalty our in-store specific examples our in investments general launch mobile, well as experiences. as

provides Our customers. new loyalty fall more program year in value launched to use even and easier last to of is

XX% year-over-year XX% quarter. grew this VIP XX% loyalty highest-value our prior penetration result, grew the customers, year. versus a members, to for Also, quarter number the our As of

seeing entire year, healthy for signs. are Looking we the data also at member

Our redeeming by only loyalty the declined and to of their purchase of understanding year-over-year. reactivated increase X% one This lapsed and has amount benefits our the and year. number final increased. has versus Customers of X be benefits caused customers loyalty and XX% in behavior. has The a customer In can X% of earning increased the the number significantly achieved sales for QX, have A the versus pandemic redeemed value where per had year that behavior increase and customers done total of prior attrition rate XX% have X make in to view we by during XX% benefits members a lower in acquired XXXX customer pre-pandemic have are the active continuing increase versus customers looking at shopping over grown rates Omnichannel and monthly historical ago. than by XXXX shoppers pandemic years XX%. averages.

of This will be we a improved greater the even our term. can Customer we experience customer done. there last are the focus. be broad an have experience, Over years, year, but course X not

friction which that of studies the experience, this capabilities customer where investments and points capability. making and adding capital Using of includes Our our organizational add performed investments approach in various In adding new friction on QX is we'll and identified by customer year, we research, focus will new and research technology were partners omnichannel resources, last are points. increasing very the large we removal specific, customer making prioritized. QX

We best-in-class significant will omnichannel customers continue underserved a our to to experience. with value deliver

QX X.X% unable apps website our to XX% quarter. were we Turning the net ago. to approximately traffic increased at XX% business. total rates. of to in this and quarter. sales Unfortunately, for during due XX% X and the e-commerce sales Traffic constraints, our Comparable convert versus represented historical years to inventory increased E-commerce

their significant comp. present will low high a future on includes fiscal entertainment double-digit customers past, as restaurants, worse inflation. to had health financial they between concerned described They continuing general. has e-commerce to we a keep than last single-digit in are discretionary inflation believe general have feeling retail. upcoming will in availability increases which that and driving how have spending, Through produce as but on inventory Entering year, rising about year, are and customers as growth impact their This 'XX, will very we year, Knighten FY impact few the year. this well to now this the something this new a e-commerce inventory our part in rate. experience. on fiscal of recent over navigate research, customer During call our investments Ben turn In close we to in-store into our our be I of keep a discuss first are eye pulse as will on will conversion

in-store talk look and market. I'd Bill. bit X. about by to an provided to experience. one move in an distance want in individual do way digital underserved Vicksburg and approximately this Baton I to in that the River. like main to information translates our a little whose a to Both merchandising Mississippi rural Natchez, And It's servicing area the fits Mississippi related Thanks, how Jared at to people. around taking market underserved is equal Slide XX,XXX The definition strategies. underserved communities. consumers the strategy situated of of our is in economy and of located a between revolves Natchez is population agriculture. Rouge Natchez into Bill

the blue. on map You can area in see the depicted trade

of see the do communities surrounding their that from many Natchez. shopping consumers can in You

The slide. potential So are consumers. XX area approximately on listed has and the demographics XX,XXX the trade wide area miles the actually trade is

Hibbett annually we store The X Natchez. in are year, X of That well river. opened Gear trade are store million a miles approximately ROIC Additionally, of area in $X.X and on away miles, red except yielding depicted the within a City XX X doing X February this stores both competitors there forecasted is combined in across XX%. our no for locations, projections in own excess $XXX,XXX. the In

underserved this area, we will in X So million do approximately annually $X that have sales. stores in

merchandise vendor we we back now incremental and are consumers. can complementary to Natchez, vendor consumers capture. that turn reach best-in-class and produce reach underserved through Hibbett launch covering well BOPIS, have These open pickup depth our is we as shoe market, discuss desire. volume markets our as of sales new, more store combined that and Since a partners. stores stores assortment full to With us our with during the our our ROPIS, it both volume. differentiate the raffle store; I'll this us double unique product Gear associate worth offer sales This of buy the is and over average reinforced system their selection with Bob reserve superior we guidance. In than built inventory shipment. omnichannel City culture a like We to the drop a sales store consumers experience capabilities with ourselves our experience stores Another Volke both the assortment. to our that to business with when provide through access omnichannel Gear in This to been that consumers are on same us merchandise to in culture, they program; the opening, in Hibbett salesmanship, sales and store pickup in-store reward training, will online City these allows point because have a shop consumers, appreciate. including demonstrates loyalty the store, the average we period, in with hard specific our who and the in twice believe online are

directional be sales provided Thanks, weeks guidance. X a XXXX, summarizes the we following XXXX fiscal from comp sales be net sales to are the low sales projected Consistent in in of flat compared implying half XX the back are expect of ago, Total year. a the we single to the relatively be high to low-teen projected Comp by Slide year expected in sales negative with perspective. followed the to digits. first Ben. the guidance are comp half negative in fiscal the range single-digit the

of range feel the driven increase. spread believe percent will new sales basis of down but investments inventory evenly of to forecasts consistent year-over-year half will inflation, financial deleverage a an margin ease, an than in this upon is with to back mix drivers of in million inventory in but margin of range stores more XXXX chain XX and margin, based EPS estimated the of guidance, range supply of the favorable with approximately Our back-office results. forecast on and expenditures $XX.XX to XXXX percent that in forecast margins supply the XX.X%, we is tax in the and fiscal the infrastructure XX.X% projected the and receipts above will of will rate more be in range of sales sales lower challenges, as income to We e-commerce net and levels. carry XX.X% our investments. sales to are and store the throughout the higher pressure remodels pre-pandemic to the $X.XX new inflationary 'XX as $XX as due to gross a relatively store expect anticipated of increased double-digit decline. from an brick-and-mortar again, XX units pre-pandemic of Net than additional in full all results progresses, SG&A are a less a constraints $XX timing improved occupancy as expectations this fiscal sales average XX.X%, gross costs comparisons that of environment, is Operating XX.X inventory Wage XX.X% anticipated earlier Ongoing projected an the a promotional a fairly to From year results to more environment. using anticipated progresses. comparison consistent contribute standpoint, favorable become fiscal of is be favorable in XXXX assumptions becomes year to overall year. store position chain growth expectation following: and results with strengthens. share predictable, to new Diluted position SG&A to become estimated count we annualization and our be overall also are challenging on by range million and of low to fiscal range estimated Similar sales. fixed technology be sales in are million. gross deleverage of SG&A of levels an Capital higher fiscal flat focus and growth, a of to weighted infrastructure the year 'XX

will shares That concludes to and repurchase questions. throughout quarterly year continues line strategy the allocation the include remarks. Operator, prepared please we the our for that the pay expectation capital recurring dividend. Our open

[Operator Instructions].

Trading. with Our of Sam Williams line first the question Poser comes from

I have a handful.

does inventory last that the aged Let's elevated aged years compared press How two that see -- number to prior? one, said the year. was versus slightly inventory release you in

slightly Sam, averages. still elevated Jared. year-over-year, Yes, kind of but it's historical below significantly

January? Jared, talk sales can trends also, fell sales you about like -- especially Can Like us on How color fourth quarter, in total the trends? it by the month you much what the some give more off?

Yes.

which us in we of numbers we really period, very Unfortunately, pretty lot we in the more had volatility as confidence. some and particular in then as mean, for in were the pretty very, quarter said, difficult sure. we November, some January. November stated, quarter. mean, of the had gave very kind think in confident pleased delivery a of with I I significant a expectations end towards impact, robust We the with of was fourth the December the were January happy I

teens, prepared our low January remarks, in effective around XX%. by think I noted we

So January down impact that XX% the quarter? on was than worse the or down because of the entire footwear of

about XX%, Down Sam.

at are so you QX, all with against first sort a some can And on, stimulus mean, given right there's these noise give -- all us now what quarter, some or us about comp some or you're to help give some happening. on and with the -- up extraneous from I rest factors QX year late you from and Jared, of how I in can us can mean, relative least the Bob the a look that? of to going big compares give the -- then because And you and delivery, like to comp think perspective especially

Yes, sure, Sam.

the in to compares significant difficult with extra of get first we as balances. opportunity was half. stimulus have The as And we our a do see period. year we the been back less there But ago inventory pressures We quarter. business We've fight around fairly X second amount out and regard supply to was it in most the really continuing the to have a mitigating the certainly, the So That big significant chain in marketplace. in quarter. with is still, impact factors effect regard believe we there will the offsetting into know the real stimulus. and funds slightly certainly

second XX have take to we bit that The advantage inventory. is stated, had we all as the And later distribution additional first And being ability of that unfortunately, expected changes in days. the XX little then of to the than with a marketplace. occurred our

advantage to ability inventory. on take Our is also dependent of that

expect to improve. balances So we inventory continue go our we year, through to the do as

not revenue a to at we as We optimize level where but the we expectations. are our said, of can level up we're year-over-year

business. of build. through be get second the support to we optimal quarter, will more we So to an the continue to first our do level as that when and believe back And that the half of go we year, will

the can -- confident your you with what's so store they're how your forth? from you the your Beaverton, so are relationship and Great. largest talk supporting how one opening vendors, and And specifically lastly, plans and in on there, happening then about new

Yes, sure, Sam.

impact to That's able been we've above strategic dramatic we're partners. short-term the positioning level the so I to support and management COVID's in the regard significant from a As strategic deliver of chain. getting calls, think things on had Obviously, confident a order of at vendor previous we're issues, cancellation partners. and on same forth. receipts with and with norms, we've But which amount led that play, so of to order said time, our over historical on changes priority lot reflects our pretty our very and a supply

be to partners. the in consumer the and on Ben premium marketplace markets, to highly to underserved our the and experience, all as in mentioned complementary largely continues underserved differentiated strategy that's earlier, Our focus reinforced remains with consumer

Our Alex Perry of question line of Bank the America. from next with comes

point. So that just to follow-up on last

of sort like, not then losing as So decrease it like other in you some your of similar are of access think And last your like I DTC. asking of lot that a year? was of as it time way seems to environment, the of we of trend I would go seems in it I disclosed another are historically, Would the maybe the around XX% mean, you competitive of increase guess throughout commentary be seeing a or like expect vendors you sort and that. top pursue increasingly move competitors vendor the sort guidance the sales implied there. that

the regard did our strategic chain differentiated supply get question. the more consumer. positioning vendors, going very our understand appreciate How some the and a our very be I bring with we clearly normalized understand able understanding a position highly underserved with we I'm as to clearly positioning strategy. think confident far very forward? focus But projects in they with and environment. to regard that. this the I as on partners. The to key to to to with They vendor We're again, very, very what going answer the need just help I same in way Alex, get the this again.

us Our continuing consumer in in strong all of to experience increased a vendor put strategic investment are with partners. our position

Perfect. apparel that men's in footwear from That's really top there? was quarter, headwinds there What chain, the in just on And of is a the the on your any major characterizing about high shoes more everyday heat of product the headwind like way supply it? like fair some helpful. sort launch Was vendors? then side,

footwear There our to transparent. a certainly on whole. all pretty the focused categories, It's were Yes. impacts unpredictable more be category obviously but as across of

in we the not cases, you're days, the week many we day, we certainly, get delay period we out disruption to the aware, I and absolutely selling product that XX the it. the XX get when is if it heat in talk think high the day and get as the it,

XX days, when would historically have were deliveries miss what XX liquidation significant impact we in lower a when there to rates. by So pretty it can have environment impacted maybe today's versus

just one. last then And my you. Got

like of while. the to the industry in you sort first this traffic then promotional you given for quarter of year? for promotional some of have all? the time commentary, specifically the Just back industry of came sort for seems environment what seen come the would promos move throughout that product? you Was drive it be the as on this And launch past back lack through a the promotional expectation at And overall promos just

Yes.

promotional We the was activity quite disappointed of January the were some to So certainly increased started end on traffic at to whole. quarter. drive absolutely of see we the the as

a there's of I increased overall, think level slightly promotions.

with expect think the in chain, in wouldn't around this promotion I current inventory year. dramatic throughout increase I the a supply challenges

anywhere I think the last the pre-pandemic. do XX saw it we'll we've XX expect promotional not than more close maybe to months, I seen back in but we environment to to get see that promotions

line next Our W. the Justin of Baird. from Kleber with question Robert comes

inflection. inputs first, outlook half to the Just follow-up and the better I second wanted the trying to comp behind on understand

to a better. probably the not worse, lapping are but about going to facing and macro You factoring be standpoint you're the inventory, what going still get obviously your from because talked in improvement inflationary curious in we're consumers stimulus pressures

the high your kind macro half to year? forecasting in outlook just within level across and single So understand inputs digits your of trying confidence the back of the comp

Yes.

Jared. it's So

on I one. think I'll start that

available got well. to not the and digital with that So we first with as happy consumer stores our we business last as foremost, and were impacted the in experience talked back inventory, of we regard as year, half certainly to about,

the our reasoning year. our around last and inventory for foremost, heightened our first guidance So be back half expect is relative to to we where

do expect healthy we a of to and one, take us. believe number in will our investments advantage That to we be in with for driver experience, that. improvements able So consumer conjunction be

occurring changes for we the And point. think we marketplace, the be a will strategic again, expect significant where that in at see where really distribution are largely that in distribution that time the only our complete markets point that's the we'll acceleration partners. Secondly, the we are

then maybe question Okay. a Bob. for And

As the improve over don't year. fiscal expense margin flexibility perspective, XX%? margin expect maintain you if we sales or the think you second for the maintaining much have from How here as half. do this I double-digit EBITDA EBIT op -- of guess, about an to north

into We've investments, ourselves live top very to and talked the about to on mean, is previous lot, consumer give some as revenue. obviously a we're putting experience, got best been position and an to the committed take expectation a going opportunities to should we've able we've of expenses years, going just the plans contingency not to in also be some it advantage we're But going on than -- able at driving want. depends to we what it's forward. this far stronger, Yes. I place up manage as to certain to infrastructure that and in line give on not we not we've situation got This up resilient at more being feel point, magnitude. volatile is but track up again,

flex. a it's and year can So But just deal again, plays Like out. of I just obviously we have more the some think magnitude as down. matter -- some said, think up we I with

is then your think this year And where guidance trading Mike. at. for just But about last based one maybe I for Okay. just is question, this the stock clearly, the fiscal market on skeptical is

tap the have willingness at here with capacity buy shares aggressively So earnings? borrowing it that curious either trading your view or you to more the into to Xx to Board's view Xx on

We shareholders. share program to our buyback do believe instrumental in is how return our we capital that

important As talk back the uses of the by important to in And you And know, often repurchase program CapEx, part which paying what most then is business reinvesting deliver we X model an we And you means and are well we're the share our as consumer that your flow, experience the free primarily. we're that's aware, to do, shareholders. it. dividend. of the and way to is committed and the a we capital cash point,

to you in We on back. part it. do. know, many you it's has our have believe to program. of still shares share specific given we around Board-approved what how outstanding plan some on big buyback guidance As committed it, And we're Bob a we capacity our going buy and We're

Advisory Our comes Cristina Telsey next Group. line from question Fernández of with the

the I for for the targets -- you of wanted about 'XX you how about last light Analyst at year out in do year the achieving ask XXXX to guidance. gave feel Day fiscal

sales but year, don't back the you in billion think be over what For could perhaps get margin and see operating still you do XX.X% know years. this and that see margin $X how getting is realistic, progression -- operating I you of target? can to next in couple if long-term to expansion

we for changed we at can charts has there a Again, in overall the to here I inventory. go not the necessarily terms. multiple Bob. again, straight number out obviously, we a are That be have linear related mostly billion in honest, released line. pretty in and the a direction. obviously, that think an that, 'XX. quickly levels said SG&A chain taken, the back fiscal since that Also, I've us. say, I the We're still June. that also lot due it's perfect Cristina, confident obviously we moving still quarter, stellar grow guess, the those, margin I fourth times, here in feel pause chain throughout were in that these $X would rates confident and very issues on a to, how impact little of again, does bit supply are is But We've the forecast

not on XX to in achievable XX we will believe very we've the months, get out, I grow are situation the to last backslide. So future. the again, when again, straightened throughout the over the directly it's be, of numbers continue put stores, infrastructure But feel built paper still inventory I with all goal years, significantly think linear again, the we don't the that to couple we but next is we've going

a then product over allocations perhaps question, How from those launches those of year? or feel do fourth specific about I mean, heat Can you lot high flow -- quarter were for Jared. a high I do have know perhaps year? about talk And of for the later footwear the the to I product your styles? the course the spring And how heat this you delayed

high of our would it styles, or positioning. expect continue I dates be relates largely heat confident to book launch very fluid. mean, our where order in again think we're delays to to continue I feel and product in and back with regards I the to we our pipeline. what's

predict I or some deliveries our we're going what's side based when an those going we launch to the to date. launch of on after the -- causing Or receive not? that's actually dates move product are inability then receive off So think and just to should

very some the So providing pipeline that's as we have But we're in confident. our volatility. as far order book, what and

one. last then And

to quarter. sheet little on forward? sort balance feel going good have this -- feel where On it's was the what's pre-pandemic. below cash it's bit like million minimum of balance, the balance it a you $XX a you comfortable? Or do What It's amount

Again, we feel in deploying is cash to it we're the more us valuable time, as the business at the and to that into this point back shareholder.

$XXX entire available have to As we I million our us. of earlier, line mentioned credit

$XX the to investment. solid said, use I I can and number. $XX people don't think any think, as historically, sheet. get efficiently you million, quickly We as a probably we're going there's we magic on million, need on can. million Again, balance cash, effectively to kind I that trying we think as return cash the -- $XX use again, the as like to we're

the us liquidity to line in use don't again, need pretty set good judiciously we're feel forward. a minimums. that we'll we any I having as and of from And So standpoint see going shape credit

Monness, of line Jim Hardt. Crespi, the with from comes Chartier question next Our

take have the kind you wondering you? do what And that opportunity to kind that captured of is over opportunity? was would I for in all what time of reduction assuming -- of think if so, Nike's you is it inventory, And think of the you sales what distribution kind time? sufficient period from realize

Mike. is this the question. Jim, Thanks Yes, for

and year about business, stores. out lead We and Sage believe and hung estimate of hit our have We a measurements those us number to that being cut about talked going last numbers. on really good JCPenney that there. the previously knowns stores off, we we JCPenney feel Sage of

going ago. undifferentiated So brand we forward, started to forecasting major of partners. retailers our a that what number X as lost be distribute were to you're That the is ability we fiscal other the who effect going pointing from were most and weeks out, product pronounced year buy in

looking not publicly. not those we're to pinned We that forward So seeing yet we results. and have specifically historically number talked that have we about a don't to --

will we -- So in way. we that have that let's our guidance, say it

offset QX the see it headwind last a going primarily in have that And that us stimulus. lot will of it we're to confidence tailwind to is from We help a business. year's the

the we which combine X that with we advantage. of about aspect other into really underserved that customer, our business. our goes we talking When you the good all have today, have we're of pillars competitive So of about things feel that the

be brick-and-mortar advantageous position in consumer like in We our forward. as going to ability doing. We to both investments as well I experience put have an forward it, We're we're going to the inventory. what about love to land continue going and into the omnichannel. we're

always last of We're about sober course. QX, as was that were year-over-year peak causes as results and and are said the the year if knew hit was everyone But thing better realistic to it like I you. that going would be skepticism. Now very positive? in a that, we earlier, as Well,

going our diluted that per into therefore, account. of about. all a We've that plan took so feel earnings share And range with got forward, we of guidance confident very a

maybe Sage the product they it end it are first or to in expect Do And What retailers I guess, seeing quarter? and losing the complete Nike Nike? bigger of from then, Do is you undifferentiated similar be a still to by have JCPenney's you opportunity a opportunity? stores? the

XX-day distribution during real a supply of this about and those the delivery clean earlier. changes, originally to chain, likely the take due we later estimated. a and be think then a Jared. early have would the all Again, the once effect. it based potentially through some all and It part at pretty did believe of largely inventory all they're that expect but it's and in expectations that of delays we of start to second would be some than I quarter of would Mike JCPenney changes the does we Yes, Jim, from was XX- little their the that for will to them that example referenced year, the see off out cleanup We distribution we so impact. the environment latest, see Sage impacts at push

broaden, but at So we the expect we'll retailers still I at least this some will as year. see continue would go of the that some have throughout year, impact beginning of the undifferentiated product to this

JCPenney, like would potentially it just kind size then in it And a Great. is it kind -- you similar opportunity? Or type is of to the opportunity relation bigger? of

opportunity. a believe that that regard accounts we'll we've markets in with done number stores to off Yes. believe broader we the be it's based closing, We do a our of

line Our is Poser, question the Williams comes last Trading. of which Sam a question from from follow-up

components of with margin quarter, to year to quarter freight of and in the merchant for drop the on? us the can versus prior some Bob, don't you gross I margin, but so give the the gross specificity guys breakout relative fourth -- could it, different the normally you know relative the the do you margin gross

We consumer. have Again, numbers, product of the overall compression basket certainly mix can see the mostly the down compared product you of as side but We freight. to prior well we as in of headwinds components, the kind the of that speak again, all kind on won't did in of do specific were things, the based I tell to year. margin

definitely into on as a also occupancy. obviously headwinds was bit little that contributing fiscal And those we we So 'XX. expect store well, lost and ground continue of

those the components the negative of compared all of all to So period were of year. kind same prior

again early to expect going that we see 'XX we we're some forward. that in as move fiscal So of

biggest piece is us the was because at Or for can the just one give view us could the X, the you occupancy each biggest, least? them the is of some which it one say can -- you of X, biggest you one the what's mean, second, or X, of I which rank difference? was So

I going the And of and in would it's biggest of things. say be pure we've I headwind to similar, probably terms point basis it's say, Yes. would side freight probably got year-over-year. between pretty change -- product occupancy the it's just

is So definitely -- here freight but yes, escalated in recent.

because we year, when of on fair think assessment? the way the comp. And just about is the probably of the half -- that compare first Is move quarter, the going up occupancy especially to because first

to the going be the I get in store But off like when tough easier you've progresses. guess we as XX-plus, part occupancy an of comparisons the feel will year the the leverage yes, comments, coming it's first to got pretty year. into

with start a you're three? expect in with And two, comp -- then to with a lastly, start negative one, do you a the QX start

of quarter-by-quarter. kind going into which in is our guidance, with negative to sticking first We're half of We're get not overall teens the the year.

That back like call I'd concludes comments. session. our hand for closing the question-and-answer to management to

these teammates center, prouder the so for you results work proud out proud our all as business, participation come there their of of dedication. distribution centers XX,XXX we're be store hard but more stores. and a We in couldn't result We're our and very much thank today. of of of their Well, support your the them, and the

call. that to Thank today's you. So And concludes them. thank you

conclude this for Thank Ladies and your does conference. gentlemen, you today's participation.

time, a wonderful at You may this disconnect lines have and your day.