Hibbett (HIBB) 3 Mar 232023 Q4 Earnings call transcript

Greetings, and welcome to the Hibbett Inc. Fourth Quarter Fiscal Year 2023 Earnings Call. At this time all participants are in a listen-only mode. The question-and-answer session will follow the formal presentation. [Operator Instructions].

conference recorded. this reminder, a is being As

I to Investor Gavin like to Relation call over turn the Bell, Treasury. you. would Thank now and Vice President of

You may begin.

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the begin, future to call of noted are we and the made Safe Reform It anticipated are statements. the events forward-looking views XXXX, and reflect on Securities and the everyone subject conference differ management's These discussed Act in from statements. that should that may company's of current statements, which financial Litigation performance Before some risks. I’d Harbor reliance like to results forward-looking the materially in uncertainties this of to are comments respect be during company's and Private remind provisions those with future

factors or such have release presentation and Commission. other and contribute Exchange described Report Form could of Annual differences on on news that filings and XX-Q, and issued in in of to the are morning the Securities earnings Some been this with noted the two cause slide the the company's

directly on measures extent a call, our find you comparable financial refer you We those discussed most more on to to sources to this GAAP the website. reconciliation non-GAAP Also for measures are information. the may

it today's of the as replay the out are policy Hibbett archived period that I’d and on to Because a sensitive this the call Inc. of Lastly, conference days. time of call of understandings information, XX to the of based believed nature this to management's limit remarks of is information conference point during accurate date. like

are President call Officer; Vice President this President Knighten, Chief Vice The Mike Bill Executive participants Longo, Chief Digital; Marketing of Merchandising; Quinn, Ben Vice Jared and and Officer; Executive on Operations. Briskin, of Senior and Senior Vice President, Financial Volke, and President Bob Senior

turn now Mike to over Longo. the I'll call

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

you slides, slide entitled results. the I’m of following those For along the three on

Now before note we know. of that used some time of would because for as get calendar a the we've started, you the pandemic XXXX the I effects other already comparison FY’XX that and effects of all now stimulus basis

will we we've relatively that quarter need Now last the last types comparisons. this a to time experienced make year, be these normal seasonality

was diluted and versus comp year last QX an a year, eight-fold increase XX.X% earnings was the sales XXX% quarter share per was versus strong almost Operating $X.XX, of performance an a XX% up versus FY’XX. increase with increase of FY’XX. for and margin last XX.X%

results came ourselves not guidance. levels. strong inventory for Despite footballer for that, fell our from expectations did a popular in results our These high demand recovery of meet brands these short and and

around the We through particular first this history results. of but issue going course are call, that some address the to

moving four I'm slide So history. to on entitled

goods and customer sporting The lesson, athletically history been the was well-defined narrower, needs apparel. nobody review point complete focused on it it retailer while retailer. is well was of to inspired last Hibbett substantially years through eventful FYXX view. particular, and and you have squarely of all of with in as us transformation a underserved the A know, retailer fashion to By four instructed in for Hibbett that a Footwear the markets, end from a base selling a Hibbett

economy In decisions everything. those Hibbett higher. higher, stimulus higher. of decisions FY’XX, crisis, on struck and business leg drove made some us disruptions navigate another the the course, to pandemic but drove through the of with market In how changed good coupled the much FYXX reopening and the

year with chain higher, inventory with shortages. its effects, aftermath and rebased sales higher. percentage prices and basis Since gross including dealt FYXX earnings EBIT higher at uneven margin XXX XX% times And the we the share higher, non-GAAP dollars supply Xx points four of per level business Xx the a non-GAAP last we have higher times

are and Last drove our this our year earnings is with say of focusing very of to to advantages I'll three hard-to-access assortment them, them but consolidate compelling by inexpensive. produce billion Superior able product competitive in strategy by It again. of a service, we investment results, customer We sales that were our advantages and that but on $X.X experience. $X.XX. a share was and gains our achieved these omni-channel of and those per best-in-class now familiar none

these investments environment. incremental in managing came cost, regarding With a especially chaotic

Now time areas a some costs and address that we're more operating somewhat in where normal increased. environment, than SG&A our it’s to have

with a we're particular words, cost other As a in improving SG&A. operating on our business a are of result, still committed we focus structure model. systematic conducting operating leverage expense while In investing review to the

on outlined entitled greater Strategic Imperatives. slide These detail are somewhat investments in five,

within strategic and conversion to of investments drive growth existing traffic, increasing course focus the are the leveraging that is drive offense, our four imperatives. franchise in category and Our of to improving effectiveness efficiency pillars the future. and And our

and of are teammates on, of in all our So thank distribution stores, I make support in ones store I these the would centers results possible. move the like who center. all the summary, before the to They

to the call over I'll now turn Jared.

to you, Good morning. six Please titled turn Thank Merchandising. Mike. slide

head leading Women's, successful, as we proven Men's, Our yield results through of City toe optimize to sneakers while Intense business the our Category lens into quarter. the additional and Gear opportunities to future. we see fourth has Kids continued Offense in and strong move with to the on focus merchandising

longer continue no provide will the fiscal of quarter, regarding is COVID detailed irrelevant. comparative We still XXXX the took commentary to comparison fiscal calendar XXXX. ’XX for impacts fiscal mentioned, stimulus, Beginning believe fourth due and that the Mike the to XXXX as in we to

was calendar the standpoint in category results the category as ‘XX launches, apparel. by performance our strongest as when Casual growing was categories. fiscal Basketball Lifestyle, mid-XX’s. XXXX, in across From our strong quarter, offset to were weak strength strong well saw a and we sales driven during a Footwear and by Footwear Footwear Sports. This Team across compared year-over-year

up XXXX, calendar in by driven positive was increase the we drove digits. results in across strong was up Apparel categories, all mid-XX’s. a challenging but was apparel Cold to Team and largest the up Sports comp Cleats compared promotional fiscal against Apparel in ‘XX in When prior mid-XX’s increases and the and of Team the quarter, environment. results mid-teens what merchandise more the saw Weather negative year pumping and mid-single accessories. significant was Sports

fiscal and low ’XX, When XXXX. and to Kids to the area and Footwear fiscal Men's, Kids compared the in Women's in when through the compared XX’s ’XX Specific mid-XX’s, Apparel, growing growth grew in mid-XX’s. our the significant Men's standout both XXs. in calendar in mid-teens. showed calendar ’XX Women's high Men's Women's, all was the and to Kids

capacity in to strong process investments mitigate challenges technology our our supply have inventory These speed enabling and flow Investments increased have delivery sales position improvement in our and and chain results. leadership, inventory. product and and of market, helped to

strong in stock prior the primarily year Footwear, Footwear reminder, and of in impacted key delays, are position supply a results. was by chain drove franchises launch As Footwear significantly our products

Footwear. price compared inflation, When due fiscal to with believe fiscal sales regarding XXXX This is in increase to disruption supply gain. fiscal were inventory fiscal the to we imbalanced to as comparing were the up mix compared ‘XX. ‘XX, calendar our XX.X% positive most meaningful comparison inventory largely as is roughly ‘XX end inventory XXXX, Due calendar quarter, inventory XX% the our unit impacts at levels and XXXX on ‘XX calendar of the levels well chain When plus-X%. to of

the and outstanding. was three experience, Our to our been online. a enough have years the for of relevant the focus our to in most years was over team last The both delivered chaos but consumer three provide strong certainly and results secure last challenging, inventory store

more levels. forward compares timing volatile Year-over-year will believe allowing fiscal during the we to fiscal chain be more inventory supply we supply precision XXXX. will that ‘XX, in to chain the delivery the As inventory and challenges look regarding be due predictable,

the Our the of growth the second half of half expectations year. in declines year-over-year year and are for in year-over-year first the inventory

now to Bob results. over financial cover call the will our to hand I

Jared. to Please slide refer 'XX Results. you, seven, Thank entitled QX Fiscal

prior basis million Overall quarter year of both Hibbett Our includes versus Total results the fourth consolidated a the million increased that XX.X% the comp XX.X% of City prior Gear to in the fourth prior were brands. increased fourth Brick-and-mortar on net fiscal have XXXX fiscal to quarter. of 'XX. fourth quarter reported fourth most from $XXX.X fiscal are by increased the and sales for sales quarter up increased $XXX.X the XXXX, relevant fiscal of quarter versus XX.X%. to fourth period the the sales In and quarter comp compare pandemic, 'XX. XX.X% comp XX.X% to sales comparison by have the year’s

have sales of three fourth quarter XX.X% during ’XX. XX.X% sales the increased increased current quarter sales compared on year’s of stack. compared to last year to XX.X% fourth a and of the year net last XX.X% for have in accounted the fiscal by XX.X% in quarter E-commerce E-commerce and quarter fourth

XX points basis favorable efficiency for of increase of quarter from leverage, approximately with decline compared basis point net in in points sales average was of to fourth These operations. margin were product last our slight XX.X% by freight XX was approximately in gains offset margin XX promotional basis XX.X% year. due driven basis the occupancy fourth factors increased Gross and lower activity. XXXX This of for fiscal logistics primarily by approximately a the of resulting costs XX quarter approximately store

fourth fourth revenue. sales and current sales approximate of primarily Store result of XX.X% XXX of of point decrease net is for the XX.X% compared leverage of last higher fiscal from expenses quarter the basis were administrative quarter operating, ‘XX selling This the the net for year. quarter

sales Although be categories to the advertising wage maintenance. a prior included that repairs other inflation favorable continues as years of spend compensation, were and and a fees, percent professional headwind, inventive to

year, increased in the investment growth opportunities period on infrastructure in and $X fiscal Depreciation to organic of increased approximately projects. fourth capital quarter comparison amortization and same the million ‘XX last reflecting

generated quarter net years’ have net of compared $XX.X of in X% did fourth were in XXXX. the quarter. prior sales fourth share share $X.XX sales We Diluted the non-GAAP fiscal We year's of to million period. either not compared per quarter or per or million in items of any the XX.X% income for in $X.XX quarter fourth earnings operating to this $XX.X fourth

full slide year I Next, fiscal move page. you. please forward that I'm Thank discuss now referencing the ‘XX will results. so to eight,

and Brick sales in year. decreased last versus sales an In year, comp net fiscal billion X%. XXXX the comp fiscal the billion for mortar the of to decreased compared compared but comparison ’XX. have to nearly $X.XX increase fiscal are XXXX, up X.X% sales XXXX, Overall increased by were for Total XX%. sales X.X% $X.XX to XX.X% comp fiscal

a increased to and Gross sales fiscal and XX% by prior fiscal over net E-commerce XX.X% compared for with E-commerce ’XX fiscal increased XX.X% account was of ’XX to ’XX. three sales for period. year the of XX.X% have sales ‘XX compared compared net fiscal the XX.X% full sales in in ’XX. versus margin in XX.X% year XXX.X% year fiscal

fuel margin lower point in higher was higher basis and approximately costs sales XX the mix. cost mix increase driven in following sales; XXX to due of carry mortar a points. promotional basis e-commerce points XXX This decline approximate approximately average is and factors; transportation margin freight to e-commerce were our activity, a an product primarily and lower primarily which basis due and by increased of of The than apparel brick

to and XX of operations. margin partially points security offset by utilities higher due store gross of in basis These logistics Deleverage our mainly of expense were XX leverage impacts approximately occupancy store unfavorable costs. approximately points, to costs basis

growth ’XX. SG&A million last with employee ongoing Depreciation the basis reflecting is increased amortization XXXX organic in of XX.X% XX the primarily benefits. fiscal our net to approximately in result infrastructure in of were sales deleverage improvement XX.X% to in point in and fiscal comparison $X.X increase and commitments opportunities expenses approximate in invest and compared year, wages ’XX projects. This fiscal

We per or We items not in generated or in $X.XX X.X% of share $XX.XX compared fiscal of year. sales net share ’XX. were of per XX.X% operating ‘XX ’XX $XXX.X sales income to to fiscal earnings non-GAAP $XXX.X in fiscal either net fiscal compared Diluted have any for fiscal million million did in ’XX.

with the of with we million Now, balance fourth a a consolidated credit us unaudited and financial unsecured strength and replaced and credit $XXX XXXX, million on We operational of available facility. Effective ’XX flexibility. million with $XXX XX, facility increases cash new credit $XX.X few new ended equivalents fiscal provides our This February million and cash cash the on debt outstanding. sheet greater comments flow. former our facility balance of $XX our quarter unsecured sheet condensed

$XXX.X by product unit of at volumes increase fiscal end end inventory pace. XX.X% much ’XX. Net at dollar increase the of the this fiscal been driven of from Much million, ‘XX cost grown was have increases, and a has a slower

We end quarter. receipts of due inventory compared at also year the had to higher balance previous timing fourth a transferrable periods throughout to

during expenditures technology $XX.X Capital the consists total and fourth to development, year the million. Capital projects. primarily million full infrastructure quarter $XX.X were bringing of spend store

XX and closures. year comprised the by a net of our store new to locations units, For count increased XX six

the ’XX. Our end of as fiscal total store X,XXX count stands of at

bought of a $X.XX at for paid the cash our On under outflow we eligible During flow investments in the shares approximately recurring quarter XXX,XXX a share inventory dividend cost of repurchase $XX.X on plan expenditures. full million. share the capital a during and focused common million. fourth we per we We basis, did amount fourth total back repurchase a shares year $X.X our and not quarter as quarterly of total

For $XX.X to fiscal ’XX payments amounted million. dividend

the our discuss Bill customer. turn to Quinn call now I'll over

our increase you, both increased We sales fourth by FY’XX. impacts, above their average and the digit Despite digits, Bob. Loyalty retail. see higher as double double nature, our with AUR shoppers driven unit during and well to customers rebaseline, us in pervasive Thank structural inflationary continue customers increased in increases quarter. business keeping shopping

to continue these were new from believe large We had per from who by We and visit more they continued growth existing driven our existing increased customer spent experience. and sales we the customer In shoppers customers. increased notably, see most shop results their investments and QX visits. in our more

to aspects customers, travel customers to discretionary life, concerned Regarding like reducing notably expenditures. will that key specific entertainment, plan are research our in our the or spend, most before about consumer we of and same that comes anticipate last spend on When U.S. consumers make that and indicates this financial retail utility indicates eating out cost. and our reductions food year, brands. as upcoming research most various year likely Also, more it Footwear customers

Turning digital in to experience. Last and FY’XX. e-commerce in by digital last traffic, average focus versus and increase business, our order experience. friction value results purchase continue our and and post sales year in be experience points this will improving customer XX.X% driven and dimensions; year the investments by on versus two, reducing to increases These our improving has experience; customer QX XX.X% improving one, were been two year the the pre-purchase

easy pre-purchase purchase. the making find include to and to making discover it and experience Improvements it to easier products

intercepting quickly, improving Our issues and to speed post purchase as service occurring. efforts fulfillment enhancing remain issues resolve on customer capability as well and focused preventing from

call experience. I will to store discuss now the turn our to Ben

Bill. Thanks

This drive is and The developing years, that sales culture to true associates. on consumers two culture. in tools creating both a implementing our mobile Our for store investing focused. our includes experience we've and last focused heavily

and mobile. an devices Our high on systems go This required the required ensuring every apps infrastructure multiple speed had store internet, that store deliver to and to overhaul mobile included experience. WiFi, level

to tasks We've were significant, also interact redefined time. what also they improvements we've The the the but lowering are to only increased completed. mobile investments tasks. process not how with required Most and sales importantly, are includes This operate. enables we reengineered sales The facing on we way the done, floor. consumer environment non-facing operating but how customer over costs both achieve were while

made They for improve driving also investments The process improved consumer. true the which in-store the consumer rate, we experience. the an business the to to lead chain. inventory also associates allow things supply leverage conversion The about e-commerce Bill mentioned hold

a year the year. This front of is payoff Much were costs loaded.

to Now leverage take our investments. The best-in-class experience. of begin us model out these we gains improving while productivity to can our costs will allow omni-channel

I guidance. back will to call now turn Bob our to discuss the

is to outlook also XX. considered, complex business on number help tailwinds The are noted as but headwinds constantly fiscal mitigate of There these ’XX that a handful challenges slide evolving. of for Ben. Thanks, a and will

sentiment prices impact goods pressure not paid increases services. and broad a contributes on the to only cost spending of has for form but patterns, Inflation in wage operating consumer higher and also and

the some and fiscal expect with in We environment and than be more change of intermittent significant lingering higher throughout ‘XX be disruptions dealing to promotional borrowing we'll costs supply year. the

several has On website. power. past the the flip months, unemployment and expected to become products in and wages the with low and side, consumers to our offer our inventory healthier provides assortment higher to attract stores purchasing feel find unique we is We more and hard customers more much

customer addition, forward. leverage infrastructure the will investments to as back experience we development, begin In office yield cost in operating and to store move

summarizes the week, compared the XXrd fiscal XXrd guidance. net XX full increase digits of Slide break impact full first sales. week mid-single including approximately in year, third Total the The quarter, the in for expected and the the our XXXX anticipated fiscal Approximately down to approximately quarter. as approximately to are year in of be XX% sales second year XX% will results. the to We is quarter, XX% XX% sales follows: fourth full XXXX anticipate X% quarter, in approximately

single expected year XX increase flat grow to to XX anticipated and of the to the be and to brick range single in low of are year. expected full second to is mortar Full in sales the the comparable full stores. the be range in is low range. is sales new comparable that digits half the up in the total year store single anticipated range will will half digit e-commerce of first digit growth in Net in the year. high single are growth sales Comparable digit low grow to year revenue range, for the digit low the while expected in It mid-single

fiscal than be XXXX that prior anticipate more year. will We the promotional

In will gross store to in rate intermittent decline fiscal levels. and of to costs pre-pandemic mix projected anticipated challenges of pressures to exceeds percentage results. approximately sales, of net inflationary higher full XX margin result on XX of margin points to addition elements a chain The compared ’XX sales e-commerce XX.X% gross basis supply occupancy year some of XX.X% as

expected to and inflation net to approximately in full due favorable results data pre-pandemic by a XX as is sales to is transaction basis and expected to as of to of comparison percent points sales wage costs XX growth, ’XX the store XX.X% fiscal SG&A well. new compensation range increase to of incentive higher processing SG&A net XX.X% The fees. expense increased levels year and

range significantly X.X% SG&A percent to also vary of on year. allow the leverage We a pre- be higher percent as first more pandemic depending the year is do quarter a to will of for remaining as net vary us of between of sales X% sales, SG&A. of sales expected effectively sale the fixed cost components the the operating expect and half second half of margin to above to in the Operating margin levels. not volumes as

half the first while And will operating the be a quarter percentage to similar comparison ’XX, second quarter fiscal profit the first be challenging looking year, year. specifically more we anticipate will in prior more the quarter the to of first of

later will for be fourth the margin third operating Additional quarter guidance date. at provided and a

more believe sales. in there after will our as projected of a significantly that half school to decline first expected borrowings inventory anticipated to to approximately is credit of the the points are basis is outstanding the full majority XX season. year the year. line We levels debt significant be be XX net the of back expense current for to of be Interest until It will not on for year

in of $XX year Diluted the weighted of anticipated an of count full million diluted per and range estimated is average share to using rate XX% share $X.XX estimated tax be an XX.X earnings to shares.

customer signage expenditures allocation store capital improving in new relocations, of the our and projecting $XX are $XX to new million experience. on with the largest growth, range We store remodels, million, focused

addition allocation dividends continues Our in capital include the strategy to capital above. share noted and repurchases to expenditures recurring

open for That lines questions. remarks. prepared our concludes Operator, please the

Instructions]. you. Thank [Operator

your line the Trading. from Poser come Sam of questions Williams question. with proceed with first Our Please

Thanks my for questions. taking

a Just have a couple. little I -

color based than Just you – me, you apparel like said are inventory heavier the a need. apparel to in to little right what inventory. on It in now, sounds accurate? it is Is Footwear the just on relative that Jared, sounds

Apparel in that fourth Consumer environment. [inaudible]. think right a promotional I demand soon in there's market necessarily off inventory now. don't the Sam, the for and more Yes obviously see We little level Apparel the certainly struggle based quarter changing in anytime the of

the experience to is So to have we of have some level to inflation work But consumer appropriate that provide ensure we we and the we want know you price of can. best inventory our impact certainly biggest the certainly through. things units that an that

So that's today. where we sit

chain the of hopefully certainly more inventory with the Apparel is our area predictable. at toughest to team is normalized The inventory. as focused supply on and moment liquidations productivity regard But becomes, more

in follow – up there potentially up in to last isn't fiscal chain. to the isn't understand chain on supply probably mean, I to rather a happened just And chain going that, tailwind I end ongoing a the all it you The issues headwind. given craziness the still I supply ’XX. But with mean being mentioned year, be is ’XX, supply than going it that

a couple years mentioned, customer inventory was think really looking with levels, that I planning normalizing as positive I inventory, we units forward for you enough experience difficult. last know the something this think is the really the have to. really, team tracking and that chaos, predictability The I year is Well, our of ensuring

the luxury be more that that As on we a forward, little of in more past. we make timely decisions go team bit a will have way a we more manner in the give predictability to can than based precise

with I as be forward. to a move expect tailwind We would would we yeah, that So you. agree

just sports specific, for a year-over-year specific mentioned if quarter more what year-over-year gave the the But more fourth you change you of was just sort in you two then numbers various you us team? on And I the merchandise for team on year-over-year. one could more things. one, didn't, you a give categories. Number wonder know vague

mid-single then impact cold area, for mid was up the positive it in Yeah, accessories by largely driven Cleats a around digit and weather.

some Some some mid-single the due of area. of cold digit prior but a from it and compare to in year the that inventory accessory chaos standpoint, weather frankly was the is

one's a lastly, the In Okay. in are and margin, not margins charging larger you cutting more some And or the or cutting gross impact like for. this And seeing that of or – you I'm you're margin impacting who anything is that? the seeing that the gross margin then gross also discount accounts margins sure that is items like I basically your your guess.

Yes, of year, experiencing I is the certainly we there's some say environment started this our healthy. ensure liquidation the would impact some impact point that last that to promotional but bigger at efforts inventory the our growth and remains to

the you marketplace extremely promotional. has as know that as marketplace, As the well with been

categories in have to we pressure want on certainly ensure So that competitive. them, that we're

– increase I'm think of And a a greatly way increase expecting you EPS are of little last, specific in direction. in Okay. to and to sort a assuming quarter an then sort then earnings get would helpful. an Bob, decrease you as QX. want the that Is it? you're I'm in first you about gave be an – The expecting sorry. QX

that we're looking mean, again specific thanks as to feel is seasonality Yeah, I of kind think and a quite I'm that here us. more see at year’s, know for and quarter for previous did I kind you but pandemic question. back go profitable fairly ready Sam, the you starting years, couple the first be is I not at you a think guess we that we I quarter to of look is again, Again, normalize. excluding like

know normalized, that bit you expect a to what of that that's I said. returning see we little we'll So

EBIT fairly similar bit, last you something as our we interest of obviously what know will do from additional says, guidance impact as have on year, I will definitely you year. in, EPS QX Our be well in little a some there as going the mentioned move see to we throughout so saw we percentage but

luck. much. Thanks Good very

Thanks.

you. Thank

Alex line with the next with Perry Our America. come of your of questions Bank question. proceed from Please

Hi! Thanks questions. for taking my

discount. XH more Is apparel And marketplace guidance there maybe first, any then gross you than that are I Just on that you inventory; year, Jared declines like as significant there – you will pockets the margin is elevated know work footwear’s be just buildup through and apparel for said is think expectation that footwear promotional. of you the the for inventory. extremely there requiring sort know XH all of

know Yes, of I mean and and apparel, around everything. really around the the been as it’s certainly levels. we been more we franchises obviously promotional continue pressure footwear, Yeah, that first question Alex. expect and to secondary marketplace marketplace part you the brands or the throughout balanced tertiary and inventory year, go promotional a but been the has on gets little very There’s bit

there's a of obviously. and As of half the a so as don't lot is margin far the the moving parts I concerned, think the first half year, we're seeing huge difference second between

occupancy utility our We but of promotional costs. stuff, get know some are that trying to more of efficient we're Jared about some thing other we continue with store said, one is as also you the to talking but going know costs, as Obviously, opportunity to also to well. get you know there's figures to there's comes when sales that the you if can we some we're headwinds think about, it get some some leverage still there talking

So I we margin a discrepancy between year. don't throughout the as the wide think there's work

of of tertiary a It's brands. Nike your Is aren't a sort secondary Great! the franchises vendors markdowns. of you to that the that largest requiring So from some of say high launch, lot sort heat more like or fair? know the it's fair footwear

I some some on That's secondary that we'll continue, expect need and ours pressure we to mean of the fair, the liquidations, tertiary and to know but would phenomenal focus there through it. [inaudible] you yeah. that primary is investments is seeing work throughput, excellent some of

last the last inventory about for is, I versus up maybe way I and think just quarter the we another how guess that that year later you on you Yeah, calendar of XQ were or by? with issues my then is last be still through driven putting the of by can about year. some first correct? the driven launch of of inventory March dealing unevenness question you talk part Is it? side sort stacked of should XQ the how the same compares sort will footwear know So think

correct. inventory That's the not a I experience deliver looked to started latter we and that will not first that's the did our prior to this to a year to we the quarter, as where the deliver the comparison, began standpoint levels, mean, and last you you acceptable of to inventory inventory the getting consumers. part year really build know was quarter comparison part That significantly year. certainly of heavier and year's know so from be

get the we of that year. back throughout the year normal off balance of and get expectation the in declines half to of back we level as inventory As will the

That's helpful. forward! of going really Best Perfect! luck

Thank you.

you. Thank

next from Kleber come questions Please Baird. with proceed questions. line of with your Justin the Our

good Thanks Yeah, the everyone. morning, for taking questions.

gross you're inflation, points. Just gross digital the more promotions, you're occupancy higher only basis store Bob, but XX on margin. to mix, expecting cost same a follow-up down forecasting XX margin

margin guide, there, this to points. product in levers year in XX basis that what and will you see are some perspective XX that what's margin only two allow So of then from dip the offsetting to questions a the margin embedded gross

so that. Yeah, obviously touched Jared

we've the environment promotional categories. so know you year product of some against worked biggest clearly us headwind is this the through think I the

anticipated know good we within rates in those and occupancy, we that – as news know and side some, and there's we'll we peaked own we flip know the some see costs, efficiency so pretty component I our probably you also at get get middle think you year store out we're looking of need can so going to sales freight you lowering leverage growth know freight well. still to The is, operations, some significant we in of the expect, are we you year-over-year, some additional of if last more –

And think operation, register efficiency a so continued see we think offsetting margin can bit little logistics costs. is freight the despite I you product occupancy fact you what margin know, some some I do store in of pressure, with your or and just our

you annual I leverage. about XX you a And about to guess go just picture meeting couple curious, on an this of talked bigger years I'm and know Got you very color. delivering focus on EBIT you then it! of ago helpful operating points Mike just a back expansion. That's EBIT basis had margins. investor talked if I question XX

EBIT I to perhaps off is the drift lower level or and can base fiscal mean year, margin you continue margins has think you after reached think So, that grow this sustainable business this do going you an do to here? are operating

that we Thank grow to reached Investor continue new in did XX%. we not expect that Yes, grow grow the But from do rebase a it and in so as it's towards that we to X% range Day. to know, have you. and you and we’ll linear address believe EBIT. We we continue here,

color additional on So that? Bob, any

I again with agree our, two of years the years have to three last think we that investor back. this there's able know have of a been to into lot we yeah, over that did Mike. couple obviously a I Yeah, that you foresee factors played not conversation as would

the and number in expense a investments different with of clearly of across categories. came lot costs a impactful making been Inflation operations. that some are business we year the think of last has over additional I

of little events returning the and kind with into traveling – to getting vendors. the just meeting normalized and more more business into a people out are Also, where operations bit

to to said, last kind an as a to know continue we're is cost forward. over be going structure lot back overnight of again. of percentage significant our that up a stuff range and We I to blip, higher making toward commit again building slowly to again XX% that going into roost it's evaluate the Mike months. that as number start move toward but So move you we're EBIT come has now XX we don't think think the

Got it.

just hear. great do And last that's estimation any have then just to you free no you're Bob, flow on question about this what year? Okay, thinking cash

pretty sales CapEx. back with inventory the Again, execute cash is, said declining the strategy, plenty to which position I our of the in I With back a I know see buying year, million our million in have cash as think as you to as flow shares year we I $XX we intimidating growth, opportunity comfortable the you of invest in mean half the still the necessary feel progresses. know with $XX marketplace, to

thanks of best Great! so luck! Alright and much, guys,

you. Thank

Thank you.

question. with line come your from the Kummetz Research. proceed with Mitch Our Please next questions Seaport of

Apparel. remarks Yes, kind sure guess as to the Using taking the about make totally more clear prepared side, talked just that the shortfall, you Mike, am why falling and of I thanks kind of plan want short you on for than side footwear for margin I had quarter. where and because split I you. question my between is looks and it's it questions. your sales my to in then of like first the

this I well. know of that least how sort about good was talk a been had increase strong year-over-year Apparel a of there's quarter, I was as down. expected at Footwear imagine But with the on call lot

was – why maybe than sort the color more you know kind miss So where Apparel worse planned you in bit I'm was that just of little line, in expected so sure we’re and but on and of quarter? not a

Thank you.

pleased So with performance. Footwear, we very were the

good with through see heat; fractionally maybe nothing's product that. compelling sell lower works. the to really sell-throughs, continue changed is There We heat assortment as but high high still

bit was terms growth but it. in in of not of of disappointment, a only of and price the Apparel units, the a terms

just but Jared couple job going to of I of think follow going up he's I good that a So moment. in through think me a a times, did

knows, a In higher what the as somewhat and transaction revenue, AUR terms total higher about the we number. had of modeled everyone we talked and a

in you the was shortfall number. the really know So transactions

you to… do Jared, So want

it a the attributed we're business, apparel Yeah, the right. not the expectations. primarily and – the to shortfall on their more other talked expecting and promotional, came in categories incredibly believe When had was Certainly Apparel us. was consumers earlier, robust you that's pressure lot it. know a as money with it which Certainly market worse our transaction business, than were number spending exactly was but in we we

That there inventory pressure, footwear. it Apparel some especially in the business year God! when the prior to we to think, wasn't much I available compare where added the So

I back comp I question you mentioned my XXXX, second terms when of indulge And kind big helpful. kind know the but you're into going like forward you at anyways, know And percentage of then the kind like of pencil then and That then Okay, I of I able kind in a the might spreads sales low guide question, run XX’s. you year, the that singles. pretty hope a quarter, that's because implies going against QX you of and four to quarterly look balance least four the might I a address on bit? hoping I little into of be XX’s anchoring in the in to by at or of That's stop its comp a low year when ’XX, like mid-XX’s. your of low year, on was difference kind a

a or again, every than so of has Yes, unique little four got I a we cadence you know last over year different years. think bit the three

year as entered of inventory position last touched the again on as we So couple times, great quarter. we've not in was a first a

think as one a you didn't So peaks, great the have we seasonal customer. kind being of about tax for big season our of assortment

of needs. a meeting do job the didn't great We

sales heavier I as quarter a do first kind at the is bit, little if stronger, first this So quarter far mix concern. think you being going feel be of here know looking we as that's we're is the of to that why and

of think that on leverage the as give first will year in a does we you bit again. quarter, as see a far goes as So and the I ammunition more lowering little little bit

closer we quarter bit remind quarter a but breakeven us a give of of as of type sales see we’re week big little that to low being that very lift well, do us. is to a accretive a fourth the so everyone not going that's year, roughly relatively a quarter. It's in a this for XXrd is I quarter considering year, also But to as Fourth fourth XXrd the big scenario. week week for having want week. to We're

being So again, bit that clearly. quarter this year your this question think I stronger I for year do original see than little a last

a a given of on reported their December Okay, then a know lastly, or year-end but vendors not them lot year and are of all already lot. end, have December you QX their

the direct inventory channels. half have any and of them talked lot of them seeing in the of about of having if kind going year wondering their and the as of their vendor how back kind inventory the much should about get by first sized through lot impact working that have back half. Some a too improve of they right through that, you're I'm half the talked year; through that kind from a discounting of of

sale two that go maybe year. plans [ph] much I direct, from you does question. your so, kind kind So you the actually I guess competition One, as are ease on part being of the a just through and guess in seeing vens of if up

direct promotion. – but cadence, Yes were know the pricing so you certainly was so aggressive, I you pricing holidays mean vendor the know – during partner

So dependent it on was active, again, very apparel. a in Overall heavily place. that really was barking promotions especially and

does start to from marketplace, a little but particular. out competitors, just pressure hopefully on channels the put direct impact are as not to Certainly, that be would less on having inventory with also business expectation overall more a from and up direct my across promotional environment. impact the get reduced significant businesses regard little promotions, the So and the an in bit our level there's a Apparel cleaned can the

All right, that's helpful. luck! Thanks and good

you. Thank

Thank you.

Thank you.

next line with from Advisory question Telsey proceed of the Cristina comes with question. Please Our Fernandez Group. your

taking thank and my morning you few. have Good Hey! question, I for a

rest the you one the environment guidance as you of consumer first is, could the in your targets. to you feel I the year. talk you if it enough remains different or the conservatism of through know The have wanted in Do about how not see light year is today's to outlook, in case approach you like the meet than year being last fiscal able cushion for

we've mean, I you we think answer. thinking that guidance each good a know Yeah, into I got with period go

conservative. or overly You know we're being aggressive obviously not overly purposely targeting

the marketplace companies putting think were we as of how look results at the we started out the fourth were played to the what in other from commentary that saw quarter seeing some I we of out and some made. we as

speak. so needed felt beyond of we little were envelope, there that Clearly bit pushing to too a the far things to some more be we careful that

we on giving and still don't fair the sand aggressive be like that on going we say the end again, bathing other one I or think it's guidance is to reasonable. to want are So end. overly

seeing what ’XX. based on our a this feel fiscal is we Again, approach for we're reasonable for business

a obviously, consumer So comes and of when especially volatility, into etc. and those lot numbers. pricing some level inflation, behavior it to of assumptions Still

think this guidance that is again, continue necessary. to a Obviously, is will modify as we now. that what if change, we So and approach circumstances update reasonable for

outlook, relation year out are And from you. gains. Are market, growth? to on level pushing share Thank how market I digit thinking of bit comp who you also industry in to more pass single that competitors the you for wanted games low growth those market maybe left in a little can outlook the share you that seeing more the touch on detail? about

last obviously we've think rate in – for we've what to what for a years is so few in growth has overall lower business I seen increase far significant since to years, outsized is than guiding market. that over a what the certainly Yes, And the our compared we're the seen this estimates year. been you pre-pandemic next very what know four

and up expectations. of picked too there points lots inflation, our ensure business again, in continue We share. we to far pick to to the consumer that some paid investments But share. the based with get out the to regard environment up all don't that So model we and we off certainly believe skis are we over want pressure

had profitability Okay, headwind Can channels, sales in what's that I store then question online those between mean margin. the the the are where mentioned I sales the us, the I thanks. update e-commerce sales? And last was, to mean you difference gross you two between and – higher

that. Yeah, I take can

pleased e-commerce few business. is to our We're profitability level for mention – of QX things A mention. a few Profit grew the our e-commerce this business. with quite in of Bill. things So, we actually very

very were as We QX. of managed up. our leveraged and We costs well. fixed in advertising expanded function earlier, costs going a margin our product was our fulfillment So largely AUR reduced Bob mentioned that that

the sales. lower not of a expense drag e-commerce was our freight But be percent on a will So company as overall, EBIT.

overall gap e-commerce that the margin just kind close mortar pretty that at gross component. traditional and to a overall of margin gross it's to result, Yes, Cristina, have expect going becomes margin is brick again, So fulfillment a the then level level. lower that you'd

the little the do terms even we're efficient level. that getting believe more margin on headwind, fulfilling mix of orders, we a though bit So at in the e-commerce there's better at of change least and gross

once we that Again, kind of you to in factor sales touched leverage back. rest Bill growth gain start on, that as for P&L, the the of

get you to close to down look So mortar profit at brick when you and the time e-comm. versus by level, the same operating EBIT pretty the it's

Thank you. That’s very helpful.

Thank you.

Thank you.

Benchmark Our line next Company. The with your John the from question of Lawrence has proceed question. Please come with

anything thanks at board, guess last right, Jared the was stores across manufacturer buy. of guys. period promos a off and you been me All here, the few When XX% time the in I one maybe you've looking help weeks for and you can

and Some board in other or your guys, anything putting story. them very Is $XX.XX just is and promo skews. there select or picking shoes but strategy, at guess changing select a across guys off the limited just were I that largest

behaving move level the to challenges we're these the promotional level as are now. with of testing strategy assure are there liquidation the But our right things of at deeper have we will where the post some, where few and promos definitely shorter foremost looking what you the promo to if I changes years, marks was strategy. go weren’t regards a There's all margin use we currently consumers we're change mean, with some the first pandemic. pandemic promotions and try that absolutely that going But the on and gives back now are and for during forward. right to on things strategies to regard there we're based executing. that we us periods, model reflect way any And our

of for to sales thanks. And customer some been of time? for much able that Great, those up all at lastly, payments to has split period Has helped reach the the customers? a just payments how

question. take I'll is that this Bill. Yeah,

is for that they before various offer customers didn't, demand spoke don’t and other brands. to we that's which footwear travel, we're We our unemployment so or but continue about that. I major our a the areas going to cut concerned And lower, a customers service haven't last year. retail; – eating concern if is in confident few financial back out, utility, back to plan to in in entertainment, more a something in primary Certainly, we is online. can I seen good. Also, know earlier customer about customers than re-mention grocery, increase cut of both and also, are buy things stores being I aspects, actually in

Congrats guys, good thanks. luck! Right, and

Thank you.

you. Thank

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

wanted for Thanks on my morning. Good up talking first quarter. questions. follow I to

first quarter know like trend you in again, talked the know be three like kind kind in comp in given year that You should up about single a quarter, given of guidance you've mid-teens just and looks will quarter. like more digits of seasonality fourth the applies the first guidance, high that more imply it something

curious, we that terms should be that just timing about, again launches shifts the should anything trend thinking where first year three four of quarter. in So of comp in or softer be or

we we I know to have we feel certainly Yes, modeled that mean morning. you calendar like appropriately. look these good changes, and launch things, with haven't at. all deal Yes,

changes. in given, potential understand we've we we and well, So we know that that where the anticipated you calendar any guidance today feel reasonably sit we've with confident that

all concern IRS. average thing lower the to obviously bit that refund was staffs other this from be probably There add a year. we’ve one I’d comes little is, some Jim, the that might out see the

we also quarter. factory again So the in at I of think looked first part that's the

you're structure. your that expect first, review from systematic and And cost cost savings mentioned benefit you you complete does to do a the make related any to Okay, this I guess sense. conducting then, review of when assume guidance year. then

is of week began the late course, began Mike. We trend process to were mid-QX. in and does. QX We of the results those able one. some the It This in achieve year

certainly it’s helpful. So

other in things guidance. part the the table we and of are All plan that on the have the of

consider able that find So we'll additional if here. cost to upside from we're savings,

out growth the of kind any of of X% kind new X% that store performance of to you store Okay, gotten to thoughts rate stores finally, performance. observation on or new and more then the

this Yes, is Jared.

fantastic. that development store job been merchants an groups know our our Our ops has site doesn't team, really incredible of working you and stores, selection new with our

areas complementary on very We we've incremental partners that very to the focus vendor very, continue to underserved successful. or the to and our market are been

the So ’XX. up during store do to fiscal new we plan take openings the

Great. Thanks luck! best of and

Thank you.

you. Thank

Thank you.

Please final your Williams from with Our Trading. will questions. Sam come questions with line Poser proceed the of

I’ll for Mike, apologize ahead ending note. year, of consistently throughout time missed on sort this Last the of year. you guidance

when look, guidance is the the compared approaching I at in looked question. now, we has things to way full the it been equal question the ask the so year. guess year of sort And you're all really way you way best that's to being a is, change there last

Well, the for thanks question.

to there out I script you've asked guidance to think and well the answer that the Certainly, we've no weaved puts expects it. of ,as into questions our one that answers as hopefully the miss thinner today.

to and and year, right trying So the to our not fairway. modeling our it be of we forecasting the We're we that believe to things the trying the into not believed hit continue exaggerate. all we're trying middle and we're going conservative, to down

to poke trying price. not We're stock the

of that QX make to our to We goals. this that of you one's They're a within deliver estimates. put can We we We No are and were the we trying to we reasonable, SG&A are range going had wanted our writing, again we our a on commitments to in range. that the reasonable. about happy sure for year. give a QX, said systematic that guidance entered had we lot high we review When reasonable think and believe estimates the end we is By because confidence. reasonable we within a performance.

those continue because going we you guidance the our think and us we’ll The we're for is that's to who reasonable, is prefer put I attempting would believable, commitment. to in to on deliver for future be high forth attain someone goals, FY’XX that. something

did Are all approach taking question my less really that if a have being you sort year way talking is I it things less Mike. year you ago, outlook equal the Are optimistic. you you more differently. taking you approached way guess, really last a you the would a you, a question are you approached did. I – than year. the optimistic it you I and or say, Again, that's it of think this versus Thank

year. the did felt same you way If you last

So this gather, little more year would've I a year, you did probably you ago. guided this time last a year. aggressively

changed with delivering so, And how understand way versus the this looking have How messages? just you trying to I'm time last things now at year. things are internally you're

– think similar in I a messages we fashion. are these delivering

note would that of You guidance have be right. the would than range the lower expected, would you

situation Because has around changed why? lack clarity the has the So and changed of consumer the somewhat.

a we're macroeconomic So little this that's environment year. operating a different

more So we year. being conservative are this

All Appreciate it. I thanks okay, right, very much.

you. Thank

to There this hand remarks. would Mike you. are Thank to for Longo time. at further call back any I like over the no closing questions now

you you look We results in to it make to attending with possible. the everyone to teammates thank to in near our future business. today. we of forward our you for Thank the sharing invest to you management of Thank continue team. our as QX Again, all

focus mind. most stores. the importantly capital, financial and thing results the delivers that and the the both and in to in invest to capital, going experience, online human uppermost continue the on that's thing we'll that consumer our It's thing in forward. continue We that's And

to we forward again, you again look and soon. So thank speaking

We does conclude This your appreciate teleconference. you. participation. Thank today's

Enjoy may at time. You this disconnect your your lines weekend!