Big Lots (BIGGQ) 27 Feb 202019 Q4 Earnings call transcript

Ladies and gentlemen, welcome to the Big Lots Fourth Quarter Conference Call. [Operator Instructions] As a reminder, this conference is being recorded.

At this time, I would like to introduce today’s first speaker, Andy Regrut, Vice President of Investor Relations.

Good afternoon. Thank you for joining us for our fourth quarter conference call. Executive in Bachmann, Bruce Merchandising Executive Officer; Jonathan today and our and here Financial and Lisa Chief CEO; Vice Ramsden, me Columbus Officer. Thorn, are President Operating and With Administrative President, Vice President, Chief

and I'd call in our Before today's Safe you those that make risks Harbor actual to our our and and uncertainties that provisions, to any we like filings, forward-looking differ remind stated statements press can forward-looking release materially SEC in get described we subject statements. as started, involve on results and are from our

All earnings commentary focused are non-GAAP adjusted adjusted today's of in results. release. press Reconciliations today is available non-GAAP GAAP to on

discuss QX from perspective, Bruce questions. the highlights will will fiscal merchandising will financial before results review the prepared Jonathan Bruce and your afternoon, for the complete the a outlook start our and will remarks fourth few XXXX, quarter from with a This Lisa call opening comments, taking

the Bruce. now will over turn I call to

you, Thank afternoon, everyone. and Andy, good

fourth one as a slightly coming increase. our to sales hard-fought of positive outlook with was declined compared expectations comps below in Our quarter a

own of performing running Christmas trees, lights than as turned Christmas, November of well e-com shopping in slowed convenience confronted online burgeoning well, our fewer as business. Monday, we with more sales ever, between ahead the and decor After Thanksgiving and customers Holiday of saw week with Cyber days plan shopping to in the

moment. shrink as Jonathan first did more the annual leading our inventories tranche of exacerbated Christmas strong cuts and price a to usual to caused support brick gross rally by January. with promotional even on quarter. These balance Our we didn't weighed and incremental margins materialize, XX speak in for mortar in last results physical be this into of and the adverse will the promotional days and us promotions were

The and beginning from The tax favorability penny offset of gross range that quarter. EPA came management in the expense a continued by rate. in the overall significantly margin of result was the short strong guidance rate was our pressure

are year reduced we positive controlled we it outcome, levels this the significantly inventories. with and worth the a full for comp well While with noting and year not debt that ended happy delivered is

position In with growth with stores Broyhill BOPUS, digital we volume the our in company addition enhancing new, of brand, and our high fleet future marketing launching by the for build successfully footprint and awareness. capabilities brand drive expanding traffic to investing the

plans jump into XXXX, I for two want Before our matters. we growth to address

to as strategic move evolving our highest transformation, on drive our our Northstar for the areas investing that are First, with as forward operation will continue return we approach we we shareholders. focus in

Store our recent Based on trends Future out. strategic program, decision we a roll for the made softness have to in sales slow some our

the conversions where return focus under will high We receive to we operation returns, on expect initiatives growth while investment strongest we prioritize markets other Northstar. and

clear, Stores the be stores. to legacy our outperform To Store continue our Future

the visibility gone high now same fourth of other quarter high time and have growth larger have into better stores at we have performance base the out we However, and through converted rolling volume begun we after initiatives. a

are are Store it the conversions. Northstar ongoing it and believe the that and optimizing We initiatives focused of growth as remain of the refined operation evolving We components initiatives the assess well with various prudent an fit on results is and these we confident out vehicle. to Future rolling we under

disruption impact, caused the providing we includes to Second, for coronavirus. supply QX estimated by be chain expect the we the guidance the fiscal XXXX are sales

primarily growth by benefit and that this is second beyond. will initiatives upfront investments the the slow Beyond in first and impact, is quarter start us to quarter impacted a and off further

year the a that in will roll We as we sequential acceleration through out. sales confident these see remain initiatives

the from point. impact any we incorporate not term does at not the longer to coronavirus guidance first estimate impact quarter, are this reasonably given beyond year able full Our

under the made operation to Northstar. progress being Turning

we know you to see first and one ago we positive continue results. XXXX roadmap quarter transformational this slow As to a year a outlined start challenging and fourth despite

We transformation through will we progress become strategic move the our increasingly expect as on year. evident the

will you Northstar and the expense driving three journey encompasses discrete through to a growth in As elements, systems operation be we multiple place the through infrastructure proven initiatives, significant performing have and top tested and high team recall, reductions line funding organization. ensuring

growth. with Starting

during improvement line top initiatives. expect following the XXXX We from

our end first the quarter complete and at the chain. brand QX of launch will entire the we Broyhill into across First, the of

intellectual Broyhill positions Broyhill best all acquired tech and outdoor and strategy hard in emphasis As into to our in and rights all special things design offerings a with specifications reminder, better home, and nicely furniture indoor property, including and on exclusive and home. XXXX. soft we our late grow

very surprise enhances the increases seats proposition, Broyhill sofas and Broyhill been value plan. our our our our delight perception including over encouraging. stores. of running sales to season particularly elevates are areas on With XX% and and date have love The ahead and with which estimates of some in performance, early reads quality strong factor

sheets, activity have area major and Furniture of bath represents window, far going and the and majority resets product we patio items. a in of top and of thus weeks the include to will soft sales that rugs bed decor few stores

of balance initiative referred our we delight and formally the close wide values right we never between rollout a outs and initiative name food traffic from to strike as our pantry assortments by reconfigures consumable midyear to brand and which drivers. optimization will consistent Second, surprise chain have completed This outs.

by everyday on list Big stores. items our reinsert insert at We her Lots expect more her to trip or even into offering her shopping perhaps

call current a on basis. to total on food to footage and to on more items annualized this while moving around X% our space entertainment comp categories. expect include us the food and in drive consumables productive lift detailed allow EBT cooler replacing will Snap we rebalancing our from eligibility, involves product maintain staple redeploying cap to Based will we coolers store trials, December, smaller mix initiative an a As and with and which our

to key we throughout all will will of XXX existing locations. store In in stores. late store store all year, roll the be XX programs new we will more openings in locations heading will initiatives lot out also conversions have QX. our mean of April, half plus additional which start included future will future the unconverted our programs be line These the around the or approximately This stores, these into in in

a the with reminder, fixed have our lift, to stores total X% represents ring, on been signage a investment in store which As test X% new return product. a experiencing modest and strong a comp Lot

results we our checkout Qlines of reconfigured we impulse and with to product. from test adding ring, approach items new as drive we've program add and our where basket this streamlined to signings the addition encouraging the expect modest Again, fixed comps In only equally a investment register. customers process, seen in to

for in focus we overall business. in-store leveraging strong continued in adding e-com that more including more the moving expanding we omni aisle We improving of And identified growth major a and in way excellent experience additional online an our opportunities a and options offerings, nearly we see to from overall the we online e-com forward to than roadmap business grow programs, improve opportunity doubled We're a Alongside expect toward It as we've assortments extended is strong sales look grow, experience, buy now by for these future. infrastructure, is the the us payment digital traffic. In of X% been existing our mindset growth has in-store capitalize is and pickup experience. channel. on grow. growth XXXX, grow, digital growth believe and the

moment a will in will growth the ago, mentioned in upfront investments deleverage. quarter we in result be making I As initiatives, first these which expense

out that expenses to initiatives as we will are accelerate as occurs. rolled expect we that and leverage begin XXXX However, comps the throughout to

and cost optimizing Turning to excellent on the Journey, processing include operating labor as associates tools will frugality fixturing. customer the peak disciplines initiatives, new a XXXX more during store efficiency. reducing shrink around progress in markdowns well including management of of and focus taking as culture tagging on to returns, ways schedule with asset continued with improving protection renewed broadly product and In selling a to food we new new creating make periods, cost and this with with out Fund rotation in-store business have

line improve margins. and be lowering over with $XXX spend reviews also XXXX. indirect and figure costs a as detailed that end December above of communicated expect year target million we our to expense of we partnering reduce all ago, items period, by three of we We're A last suppliers to key reduction communicated the year cost with

the include OpEx back As margin gross a invested are reminder, both portions business. components being and savings into these and

transformation added our strategic structure in increased strides succeed, continue the new transparency. in Executing We've to the organization, have we'll terms a enabling XXXX. and organization of organizational with important Finally to and these company. we of simplified talent, communication XXXX and roles the leadership in our taken and including muscle starts

We balance culture and fresh have a and knowledge drive institutional a performance-based perspectives we're to healthy creating accountability. and increase of results

newer in forthcoming this be In shareholders Day. results we have insight postpone the to the to we and greater will when more to earlier into to event investors factors the light and have Investor more will when mentioned it present our my than comments, of of hold believe able some our initiatives. decided provide of We be visibility at beneficial we growth

later. Lisa to will and return I comments to make that, With additional over some hand

afternoon good everyone. and you Thank

year noted, finished performer below double-digits, case X.X%. a was comping QX mattresses, sales a low upholstery up top on merchandise furniture the increase of From and last Bruce As perspective, strength top is declining comps category in with goods. expectations X% notable with which

introduction and produce which results by up Our of strong our has mattress best core and offering, case while from driven better fireplaces. newness benefiting offering. also Broyhill sets to goods our in was business Upholstery and our and stepped by bedroom master continues very motion driven was Sealy, from strong

through growth well. remain options and quarter. continue purchase had Big for furniture perform across offered Progressive, other with transactions Easy in to Lot's penetration range of store. credit XX% the the financing sales two Leasing, with Our very lease to but this only in program in-store once furniture very very the And QX purchases in grew in low another the categories quarter good card again significant not popular

across in-store with up partially good many productivity collections results décor, slightly in storage, bedding newness offset which driven fashion emphasize categories by improvements, was Home in departments. bath, QX by and and home other in and holiday and assortments presentations declines Soft

good in giftables and space in and primarily grocery product, planned DSD by beverages, and each food to down coffee. and were with and bulls weaknesses reduced offset declines from Food cookies results Consumables sales LY the experiencing dry

of care against up were declines strong that departments, closeouts areas particularly consumables that Similarly last like housekeeping hair businesses were other strength had from in offset year. by pockets in like

quarter, planned down the anticipating season. holiday was for shorter Seasonal the

a strong slowed a the Christmas in and after related comments, As was many when holiday opening noted start November were Bruce Cyber Monday the cadence. in delayed our purchases the week on of sales after until markdown product

been on but in down space home, QX garden outdoor again related early encouraging, to season. is living very to electronics move accessories and toys The reads the assortments strategic and lawn our early the categories. were have finally, hard decision once reflecting in And other it

processes. to and grow for to in initiatives want Operation take call handing Before strategies over, a passion come. hours I continued the of fund core developing, the team Northstar. to support efforts the XXXX spent journey to testing the improve countless year out rolling dedication moment team execute truly their I the appreciate to the Throughout the and thank in our and business,

I’ll for the XXXX. our insight now for over turn Jonathan numbers call guidance and the on to

XXXX would with Lisa provide start to and then our some to your echo color for cuts XXXX. and some some Big comments here entire like the I'm Lots. Thanks, more on I at and thanks QX going on outlook to - team

increase sales fiscal the partially quarter comparable $X.XXX year year, by not volume, in over we new and and for from slightly year were the $X.XXX higher Net X.X%. the high store compared last sales XXXX decline to count resulting included a stores growth reported billion sales fourth comp of base relocated the offset of billion with and

for the distorted up ran of in the December the we XX for well Christmas January. days where see absolute significantly cadence was December The sales not expected. of the we did the terms roughly being ahead by comps and in traffic the miss In before missing calendar are to line shift, quarter, predominantly store final in plan leading November in plan

$X.XX diluted last per guidance income $XX.X previously fourth adjusted to was share, to the of $X.XX per Net quarter $X.XX for net compares our or $X.XX or share. quarter year's share. of fourth million a diluted million income And which $XXX communicated to

was QX promotional as increase in down markdowns shrink anticipated higher for from and annual January XXX our we of The selling year's we shrink in in expense was XX.X%, The guidance result and margin quarter rate, last basis gave our December. fourth expense. an gross rate physical cycle points higher from early began a when not inventory rose

approximately protection XX our are we in labor transition teams. that now and behind as for points erosion made stores margin With rate a from of trend this part fund during contributed transition gross us, the model priority It a reversal basis to believe the XXXX efforts. we we our the and asset journey stemmed of key making the store

The were the erosion Bruce more anticipated beginning than markdowns intense and rate came promotions of quarter. the margin as referenced remainder gross the additional of from we at which

given expense we year. reported XX were The the rate DC QX the dollars basis expense points for with against associated were quarter, transition expense versus the period up a excellent we XX.X%, and the of year. from $XXX of headwinds improvement in last million Total million, restoration in was This $XXX including last for same an our result bonus the down some accruals. costs the partial was California quarter

Interest lower hiring primarily to income store non-deductible favorable XX.X% headquarters QX based was year last by was corporate million flat of year's $XX.X the resulted from quarter credits, rate compared XX.X% leverage for compensation. with and the from in offset and expense Expense and payroll rate resulting partially state settlements higher executive last tax expense.

the decline balance to $XXX XXXX mitigation inventory a of activities. $XXX as fourth levels were last sheet, on compared fiscal with million X% Moving to result a when ended million, elevated somewhat year, of the inventory tariff quarter

Excluding at and line transit effects, with the in inventory on hand quarter. was expectations of beginning the

opened us and leaving of four we stores stores XX, total $XX.X XXXX QX footage with closed million. selling and During square

to larger categories of allowing For XX a support continuing market, Furniture within majority we and the bigger, merchandise Seasonal. in us stores boxes the to bulkier relocations assortments opened the into with year same be the

XXXX also expenditures million XXXX. was since than depreciation net growth three We of closed $XXX higher during approximately million million of year stores increase or XX fiscal last a store and $XXX net our first for locations approximately $XX year. positive expense Capital were

defined of our in expenditures DC the flow year, cash Free effect operating as capital for portion by the $XX of our California cash and approximately provided the the of less was the excluding net million reinvestment a of headquarters. activities, proceeds sale Columbus

$XXX of debt year and cash exceeded accomplish the were million and debt long pleased quarter ended our $XXX quarter, million to $XX the during We cash year equivalents were debt of compared term long able and expectations. with million we term million cash ago. Again, $XX of reduction we which of a equivalents and to the of with beginning cash

For of shareholders share payments the million full million. of we our of million year cash form and of returned $XX to $XX the quarterly in $XX dividend repurchases

cash common $XX dividend share. This March separate today quarterly will April a shareholders payment approved directors approximately XX, record declared press of XXXX on on of of board $X.XX million a payable the close business as of of be XXXX. February to XX Xrd As dividend announced in release of XXXX and the on per

low from reasonably sales subsequent Turning disruption estimate said impact estimate in on and QX point. share It in to to does at quarters $X.XX of diluted takes guidance for the in coronavirus chain earnings to per guidance as of diluted not which XXXX. based Bruce guidance earnings a year impact we This the in adjusted comparable the full single include sales $X.XX per to is increase. $X.XX be coronavirus. slow XXXX. range this any start share a This to our flat we from We for of the compared range to account the into from year can't the expect supply bakes digit

ongoing from. flattish We and compared expect effects favorable last impact the with savings the tariff some gross promotional margin be by and and Journey rate pressure continued to year mix offset to Fund

sales investments of our are impact expenses the journey higher as including the From an in support, by levels, SG&A expense pressures deleverage our growth savings and expect wage upfront initiatives, and occupancy partially from perspective offset and marketing only depreciation additional at projected we some plus

all throughout we the weather continue to continue expect Our and we evaluate driving business. will expenses as did of cost XXXX to out critically

good earlier, the cost savings by Fund more As our year. we from of and referenced reduction Journey now make Bruce to on million total be significantly progress $XXX expect initiative end the than this

which reduction $XXX to represents This estimate $XXX For we earnings a the from lower million year in the conversions, of of mentioned, The to Bruce further call. XXX future for reduction from remodels are year approximately a XXXX. be our about number compared million gave have reduced expected million. capital we to on expenditures of as the largely store the stems December now $XXX XX

conversions and to be stores the we where These strongest on the focused get expect markets will returns.

will approve to approach As cost and disciplined with operating we exceed continue our a capital. projects of and clearly expenses, that significantly to capital take expenditures only

expense fiscal million Depreciation against forecasted at million $XXX is $XXX a in XXXX approximate XXXX. for

free improvement with in flat. expect We driven by CapEx EBITDA cash lower roughly flow

of XXXX. we of our will Inventory offset As efficiency the include targeting of to in XXXX of be efficiency the replacement capital for part initiatives. ahead by investments are a this objectives, need rollout make growth improvements new underlying will roll we allocation some out although in system inventory

we expect XXXX. for tax debt average due the anniversary a to discrete from interest some We up and expense be to as year be levels the rate benefits lower down to little

income first share. year to $X,XX income to diluted last share net of diluted of per $X.XX quarter, range cents be compared we $X.XX adjusted to net the per estimate For the in

digit decrease mid sales comparable in range. on single low This the guidance is based to

earlier coronavirus we from supply later for Our quarter. start the and slow chain reflects in expect impact the a the quarter the from comp Bruce mentioned outlook disruption

margin modestly expected gross initiatives promotions favorable is to quarter benefits to and year mix some by our due the of fund last to effects tariff increased First offset journey rate down and be from effects.

SG&A expense with to the due impact negative as for will quarter QX exacerbated by moment listed ago the the deleverage fact a comps.

and will expect year. half that leverage we the the We see sequential to improvement in back expenses of

Overall quarter our referenced, as challenging. will be well Bruce first

as that through significant will the see confident we results improvement sequential are year. in We we go

his turn now over Bruce call comments. back I’ll for to the closing

Thank you, Jonathan.

As challenges facing some we XXXX. we are described enter we have as

long create move stakeholders we the as However, actions our all taking value that undiminished confidence are we through more that to expect and to visible become for right the term year. we remain

ahead we committed managing our the meantime In being of stewards disciplined business see many opportunities and way are we capital. and a to in judicious highly shareholder

Finally, I not also talented to hard year could their for of during a lead associates more of moment ask XX,XXX all work perseverance and team. dedicated to and want thank XXXX. and to take a I our a transition

I'll call turn now back over the Andy. to

Bruce. Operator to questions. open the for Thanks, would now we lines like

first comes Trussell Our question. Thank Paul from Deutsche question you. Bank. Instructions] [Operator Please your state with

for my Thanks afternoon. call. taking Good

challenges. to of So certainly understand start some the holiday

of quarter So I here why supply seeing you in chain. wanted quarter. is you backdrop the with disruptions and kick exactly start actually what to this are of better on in describing elaborate you you're off think the in the understanding a a can first Maybe terms soft off to

before our quarter to Jonathan, as and good with just over I'll Christmas. started a a then late to hand with off customers right November, start top started talked a off to December we shift as about, Paul we fourth kick hard-fought quarter purchases to things off

since for our have and fourth promotions late into in said, a may back into shops QX relatively we the promotions going in those ability customer forward January. heavy And February that quarter historically the pull through speaking. up heavy had late our impacted January caught That

QX things year income That versus by that tax off, percent. said XX yesterday, last QX refunds about other a hitting in first plus through behind us are we're are couple

very have for of on Jonathan? we're QX. those elastic point that chain balance is We the QX working for mitigation the supply this with at already sales built of coronavirus refunds. Also impact programs into and

that And - percentage is of I'll impact directly now Yeah. saw know, Paul, on effect bit you also merchandise And in April news we teens of you of add being another coronavirus, sort just our see obviously which spilling source is country an high in now that. us the the yeah a for from also one little that's and China. from we know by the there. some factories there's into impacted important indirect closure that is impact over Vietnam

for receipts because of comet delayed So either we what's current coming know our in potentially the into about happening. QX you X.X be estimate are best receipts of sales and into out won't that know a delayed already of you impact some we've know of sort baked DCs impact in

in As baked we've said haven't any impact. we

that is Beyond we've guidance date. be on think aware QX, based we to in to some but QX likely into we know there beyond that will impact highly and some of our be incorporated potentially what for we're what estimated QX

on That's slowing bit you that know, of dig follow bit color. for a regarding Future. is up helpful. Store Then, just of you as rollout surprised allocation capital for you a the that little are us, Thank the reassessing remarks especially into my that the your strategy. the little Maybe I'm

Just help understand. us

I'll Paula Yeah a color on that. begin to with little add

invest You know, to highly the dollar return. being year capital of in we disciplined want all we're best first possible sure focused you getting allocation, said the we capital know on every we've that is adjusted that in risk make past as

couple a things going there's So here. on

about same very going like currently. as Store existing we little are your a all understand high Qline, what's Bruce talked At softness in we make need which Store of Future fleet are the the pantry have and to we know, our on programs Future saw sure Lot you some optimization, return, we in the prioritizing time fourth of in the we of the quarter the other First we fleet. fully

then these markets meantime continue return, at - just and it. focusing we're get and going we higher alongside rollout, returns to the continuing a with best some are In of where but out the pace the to projects believe we on to continuing slower roll

very disciplined and our a allocation in to exceeds getting work say return adjusted very making it comfortably would sure So again our cost all being capital. comes risk to of back we're capital I

like like to bit platform of said standardize the of our categories. you for our many Future Paul, Jonathan's refurbish, keep is the of great comments I'd add on us little and a and that is a growth I up ago year Future about Store Store the fleet good to it very with a know competition, the back a enables our showcases

capital allocation, it's the to it's And things and we're that to better operation forward as it loading as good some out value doing think also shoot return a up It's make we've the store in that's about of evolution, great of the green roll all initiatives that that even be well investment. as in down Northstar engineering cost we'll our Future as we so as terms and it come productive. good for of going much the we what up experience customers the higher a the our bring more on Store with

luck. the of Best for color. Thanks

Paul. you, Thank

Group. Feldman comes question state Advisory next from Telsey with Joseph your Our Please question.

to it be what would taking Yeah driving wanted add Store the opposed lots to growth, green Yeah. with I is you with versions a it's feels initially. for mean of and what you're - have and you going seems to Hi. roll initiatives Store thought digit I you store now afternoon, furniture you of will you're low guys different you as I working, what to Good as guys. doing Future, with here's wanted of with be format, of have guess know a come I like this back like Future question, our to the on, double questions. going that to different the Thanks the of lot up know it we're it like up we're growth, home lots exactly would it other, driving things shoot follow also said

all I guess soon they stores do soon me the How soon How Qline. things? - do can have assortment? new different stores all have do the you like help understand have all new single I am furniture these So how

Bruce. is This great Like the Joe. absolutely said Future before, Thanks, growth. I is Store vehicle think for a

initial and talking setups about your store plan the smarter responding you best you I over read return. to customer new evolve refurbishments how getting get you're as and - time, think that you're any investment when constantly it especially they and you is where store know,

So having be first the with said The year Future. to that, Store pleased the growth we are continue lifts in strong.

still up strong remains The versus thing is enjoy we do do having customers know chain, disruption. look balance basket terms is of can at in better the still of traffic, by we Our growth. as it it more

the to and we For X% customer and or that we a Lot so. are the lift add X% we right changing front example six corner, by inserting to get products new and our back with in her fresh insights, every surprise weeks delight

Q line, continue easy once Q the the lift. that have In to and with we'll this Q, know adding addition will changing and to to for to with go you X% is again product, the a that Store So Future her the convenience along grab future, of upfront retrofit, X% the another balance

her will Future the talked the in is aisles brands going outs as Store about she of big optimization and all allowing something close but in deals, she be retrofitted things those competitive prices, at to Pantry get shop forward. from, name still and the wants

And quick, then other additional grab for convenience go. upfront and

this So in grow Future brand, as it's add brand know we're tools, also forward. about looking Store the retrofit a and going at better we tell navigation to you with to the how again continue store the using Ultimately once on story vehicle signage. base the more

you shrink on understand. me the question it of a if you up through found that lot it a help find know, then. would you noted follow But annual then guys you can And makes the sense, inventory you which

from stemmed I didn't meant, store that quite the you what tell if said it new operating Thanks. to guess model. You could transition understand I me? that the

store of the be other terms you of as that our sort upheaval the there a try through we cause as as transition sort to structure. and was quite of and part it of being a some time. priority, that There appears know I'll management as shrink who know has of high model people in your little changed company We kind your Joe, elaborate was root been bit. operating the was that to left in maybe of a know there went of you not that some points

on getting And ops the it's The stable stores shrink that we team where teams is our focused very an good years we're back been over a us are settled protection to behind are back last where we've been said, and couple the news down on asset as structure. improving to of a trend.

one primarily it lot this in of So XXXX. with a stores a occurring just being we look of at was associated off, during our kind as change

question And your to Future regarding wanted the layouts. Store timing the of Joe, you had of the the just around that some I answer and

I the understand we think the of have will retrofitting be back the stores in they and going and we May, have important will pantry Store the broil will optimization. Q in all Lot, Futures that it's to all line,

same So forward maintain of follow think new and really across will we and the that to remodels stores that still consistency path. going important all XXXX it's our for Store Future

Thanks. to That's with to I'll great. luck Good hear. good That's Thanks others. the floor cede this quarter.

Thank you.

Short comes your question next Please Karen question. with from state Barclays. Our

thanks. Hi,

up follow of couple made. some a comments Just you've

store first labor question the just So is model. the on

terms about how be reversed new simpler backfired. You That But forward? clear of talked totally my and and that question. slightly know, what the structure will I just improve management in question will not on that how I'm answered you the know what going you've you guess maybe

more the facing Hi, transform store remove Bruce. went I'll there of on you Karen. a as - the hours. bit volumes it, through leaders one in year color into labor part hours give is of certain our stores we little assistant customer of and restructuring those to was This is

So event in that actual store, more be us with hours shortly. facing normally that the over would Jonathan's that frankly our but good oversight up with ended frankly some of it operations that disruption we'll in customer quite think we leadership overview was shrink correcting blip to of point the I that stores a the quite and amount less of left a

term short guess, the focus helpful. And hopefully strategy. you guess on terms coronavirus transitory. I softness. have typically don't this I then that's Okay, a your somewhat of in is I mean

more based of understand returns did Future, why out Store I looking little that one things reasons on a of would but call color coronavirus the partly slowing… that, why you're and So on like and the at slow is you you're you

hand is the that over headwinds slowdown continue types XXXX to time a start slow our why not X. Store down operation to from we QX that frankly Store with of green and off reason sourcing the is Future Jonathan, stores and returning would evolution us stores is to capital but the through Future. base XXXX. our it new not talked into retrofit again investments add in Coronavirus to quite balance what better at Northstar and then in chain like standpoint, very in initiatives quarter once high giving those terms coronavirus chain of allocation supply I'll we first grow to of baked of Karen, the just to we shoot about post a use and the some store getting

a allocation shopping just to good capital sales. better create and it's comp matter So returns a and improved better experience, timing of using

again. And the to go point I shrink back want just to

things a the do the stores we expense to know, in you made were changes so ones referenced, we the and a we to they've reduction. contributed very point believe the absolutely made right significant You changes are

So savings going gain that we you change. while to able that we relatively impact can forward. compared believe to been we've seen the from again we it's have know, And that fix shrink that small

that. don't undermines yeah it decision do we our So certainly think to

you would of thing actually measure experience is I call which store our Score time of that out Net that has Promoter kind sense you other key a been all at know And the high. is change,

made changes experience. consumer affected don't adversely we've we the the of think So

me. on have quick kind for most two general, ones in is already US and On retailers coronavirus way. the that of to kind already of their retailers the its reported in inventory Last of as it relates Okay. have said or

ask I've sales the this, the you that but January. definitely gotten So invitation second this out impact you sorry shouldn't did And that of question in yet to call XQ. send end and at Investor Day And the out. then I'm question,

curious just that through thought I'm cancelling? guess obviously I So you you're how doing when

Yeah.

scheduled delays you been of out and So piece mean receipts specific vendors Karen know of as going out not you our is know, that coming and contact be you the on there to what China. merchandise to that by as know quarter based we that. the in I we we today on get in in know first have in just end stores extensive We've the with is - be

we So based we into what necessary know we're turns that. on know, that. We thought some today, working out it hope to from to what you our was very be guidance hard include baked to effect mitigate conservative we've

Day. Investor to Turning

many and is You our of rapidly all to balance of I few the the have and know, I businesses visibility spoken No uncertainty coronavirus of has around and the other think over certainly think weeks context one past industries for the year. whole other that. retailers the and first evolved very sort that impacts

QX the have making I we start you news that helpful that soft get growth results know would to in positive other of incremental community you seen part And felt as we particular of the got whole. do a think some middle a in we're report towards to going actual in rather the is point given Day the backdrop as initiatives. elders a having believe year projections you to know we've progress though for results than to our more know better for just we various when Investor the we've the threshold be terms in of we're report from

full just recall at are it I right. Karen still the a had factories. these to caused not coronavirus All couple going people wanted Year you in know not and in back point to this add just to people on extension that Chinese dead work strength China still of things that are other New want

times get much how impacted very ordering your you are long know definitely you to very, going So cycle on QX. in

And so expect. that's that's what we've on what and planned we

helpful. you. Okay. That's Thank really

with question Please Markets. question. next Anthony your from comes Loop state Capital Chukumba Our

for my question. Thanks taking

this. competitors competitive month same other the think had the a you think Sorry much of in I'm sort the you of perspective, do you of environment, promotional to few do a your you seeing with minutes that the late, December. underperformance know much know so trend. the how I were But I so missed particularly in do sorry from in dialed fourth know quarter you words miss How the

sort far were As of could doing your being were same the that and as competitors you that tell that's more you trends you seeing seeing where promotional? you. Thank

Anthony. This Hi, Bruce. is

know just quarters interesting of you one. whole an the is You tail know to the

start customers You quarter the the valley The got shipping Christmas very sales was extension but will know in November, of the the XX for final after into also where going declined alternatives was pure season days promotional, lot us. if late a more by and alternatives December late our really late shopped and customer good quite many extending the you in things the the o by she really traditionally to go to plays in shipping like our you had customers a Amazon frankly has know with. many, obviously and many gave

that took onto new didn't So last that but XX as our actually keep to it felt into that decline. to thing clear our promotional inventory year. more January want got margin right was And we going those hit to before Christmas that the the inventories really days do was holding caused then on we we December we to in

a helpful. related That's And it. Got question. then

again change that always wonder and makes and and the You know does way that that all mentioned fact I've it make somewhat gotten you I and you. with that? fact strategy you - you the that I you you mean, you strategy. the channel just rethink happened that been I think could know of omni what know, might online at if the mean you conservative hurt about mentioned sort shop that you impression your you've people channel that

from of to profitable less X% last the doubling business in so and Good not process sales penetration in the question Anthony. XX total of fact X% conservative, that. than nearly No we're the we're months we've gone

So on that comp because in know along about point platform in our work in overall e-commerce to alone alone. note it's interesting we store and pickup with QX online QX a added added you accelerated just of buy our

will you over percent year right of start time that journey Prime the so that our we we a ago from Amazon XX% customer there have and an a plus And you and did card. know online them little insights now of customers over their XX shows know realized

So it's And important the for it's in we're very this I grow, us. to over think why in And there. years three said our grow that's going to for area. earlier next compete opportunity I us answer grow, like remarks the

continue a our in grow strong get way, XXXX a leverage in meaningful year The way. good we news next to over the infrastructure, to it

want know, customers customer now the and at Our to back. friction personalized we you the as enjoy convenience and more of quite truly look frankly a it keep we more get it remove coming

for really hard competing a we're e-commerce channel how true become in we and good So we're thinking about resource omni her.

Thank you. helpful. That's

you. Thank

next Please Brad your comes from Our with Markets. question Thomas question. Capital KeyBanc state

and the to my takes Thanks and both hoping those balance more Hi. first us margin a puts margins in give Jonathan taking the I'm think color question. on about gross of particularly through for year? and quarter maybe the how you little the

said whole the that. our rate know that we we you see bit a in Sure, in it to promotional down we some with prepared being see Yeah And first Brad remarks then year quarter margin for as the that. pressure do riding I think being would gross flattish. be a on happy you

still in which evolve it's a a ways, but and know we've multiple And XXXX sort of parts headwind but months year a of a over coming impact whole bit a has thought different that you As sort at some still some Obviously behind you of picture that there. it's significant mitigate still ago, as couple as through we back we sought of to year. the tariff to abated there of year moving are you look are sort full what getting There into somewhat sort couple of year of flat. may the in that directions. from fairly go

were to more promotional. be also incrementally will We assuming some be need that there

vendors The our in-store relationships out loss, for You and been make gains been in based through to with past in the our so initiative there know you on of both so that's that initiatives the good of some COGS expect of where baked in shrink progress. terms we've that through also where know terms markdowns we running quarters and we've good on continued of fund progress know, we of couple we've the our that in. journey taking made cost

those things of broadly we offsetting kind So see in XXXX.

the For the due the be as as some some rate well margin baked went promotional we that in in we we'll year through. full effects other more assumption just to erosion those quarter first of

Very helpful.

last about opening signed accelerated to growth Of in then presume open you the whether course you leases on thought stores talk you'll year terms you standpoint in you've little and had year. up probably I that store from bit? Can stores. keep process want that locked What company of evaluating just be a will in do you this

the to Yeah mean I I of mean near-term long time first of you sort know lead a all in store openings. fairly if typically

have have frankly one we is yeah keep more pace profitable So so line time to top a where can through that's can close productive similar and from last we focused openings currently looking we broadly them and we on stores year things to to that and to for expect you're be similar then be heavily get we the would our obviously probably are something closings of at to on how stores. low the performing more don't those more so we to them and manage

I time and longer calls a is think that's in a looking prior something know again what that. think spending potentially that we're term could we that at on the opportunity. we've be And opportunity of estate Beyond real been we significant lot think that spoken we earnings strategy recently we've a

when were we You ready talk fully not our know point expect about more reschedule that. ready at that where to but you to us Day we're I would a quantify know Investor we quite to do be

Jonathan. you Thank Great.

Piper [Operator Instructions] Sandler. with next Please question. Peter your you. Our Keith comes from state Thank question

everyone. afternoon, Good Hi.

year initiatives digit comp four in year it low understand rest of So if results. on back understand at comp I with improve have with to look two single out full at getting and guess the through low what's rolling QX. after single a Kind QX flat of going we I that some to improves. I for the you you quarters implied the the

get pantry but comp been stores want in. tested I So just it could Do is initiatives have benefit the of much that feel these guess stores. to see comp to the going that a mathematically left with across out be looking roll lot as many a data on in I confident I the broader how consistent to as at you you base

Bruce I'll Peter. off answer. the start with This is Hi,

we've this occasions XX network point. concepts a when of more pantry optimization tested these time and So it it to comes good at going through lot. and and maybe than amount different up we've to that across stores our And for done the

that built field understand can rolling factor through keep we so into we but built it the and QX QX in actual in ability with for guidance. but up our our So we've have store that one in put and we to all sourcing not in them together

we've into the because just dig drinks want more particular the the and it a that. I holiday pivot a oriented to weather food little to around hasn't more year I gotten there like on what think But impacted category is in I last because And wouldn't headwind Any about to for the any food guess and food area been snacks the as Okay. like feel impacted category. we better. and a talking entertainment consumables food things thought really comp or of

Okay.

will also I and one that jump on in. start I'll know You think Bruce

You we are And know the for to consumable to know us. you point. all look food very first categories you important your food and of know

DFT Salty space been have more of we've portion of performing her to but the of of a comes in pantry us consistency really We moving assortment grown been rationalizing the some from assortment and basics. But for she store. investment. want level to the We Candy. away has that when which of matter offer but and that still also snack it's beverage to just the our right

together that with the so think consumable I food come offer both that that's consistency while So her optimization can we and that be delighting we about think that the at assortment. pantry I brands the of where can to a be national really with our which and business. very surprising that part believe will important we still time same to her of continues XX% with continue And closeouts our

will So the consumable optimization see as presence this you within from we summer the pantry roll out national you see a area. assortment growing will

for over talked some in the will see we space to the freezer EBT. the for have we and of and and other more cooler cooler still available to maintain also again cap about consumables. eligibility allocated elimination have moving You'll And that within being productive SNAP food space we one and product categories also our that

of are going Hey excited just Lisa business little well. a about to Peter going very and on explained to going get grocery I you've this. appeasing frankly mean food visit of Bruce. actually talked and is their come go. us I'm consumable quite somebody I'm about this is add necessarily what and bit me to to our a store. win about talk where on We're first canned heard verse not

pricing exotic what bringing foods muted having fresh we're adding store well food can brands of competitive been at name are back this sections finds you into and But we is proposition surprised somewhat good in that food as which our a as shop the also has in the in point at consumables store our in with a closeout new especially but our at the excitement good future. by where be

that. into we we're we go is at just looking go is What as elevating XXXX

engineered store the a you right competitive the good are little name the showing clear talk good putting Myles prices. me Woods everyday that buys earlier bit brand big heard the know and items in at where closeout You big with the compared and messaging buys in same signage about the deals items buys to the

to the about think of sure to make that understands everyday our percent as shopping others be well want XX Jennifer really trip coupons a and ability does XX really lower proposition offering maybe forth. that is she on year. you those you We so than disrupt better has know get XX manufacturing as plus brands with priced to that she dealing could when closeouts and So competitive named that a our it that it's are

in can frankly more. could some lot about improvements upfront. the there more a food and of the That's and consumable layout And up be that Q quick when we store future space be while low upfront the story view store. convenience the that better back the our way store disturbing of to profile the furniture that telling just some have disruption then It's we to go of of of all in Q the for we thinking to the the opens utilized foods section grab and want us with pantry the the why quite do realize not

lead this as So start top and of you a is the and of you on this we're where it. will future for vehicle store growth about excited using building learn when all what

Okay. that for and Thank very you good luck feedback much

Thank you.

state Our with Bank next Haas America. question of Please question. comes from Jason your

for taking Thanks Great. question. my

the comps planning is it that the did why headwind into some that questions you that was to been at is weaker Thanks. all. benefit even are there's a stores. reasons margin one hours I I store few are comps in mean maybe into add the back that labor the the but So impact and that the during there I excluding that shrink little to were reductions know on store. a add of some a overall understand labor

Jason. you Thank Good question.

result many volume of know true was too took per had You a a assistant improved store the as number cause we cost team did this of actually in we terms again the maybe once in of the overhead it. the store where of hours that you the some of that volume know customer leaders actually facing the actually the

demand hours was labor better was terms the matching a there labor utilization store. So in match the of of operations. better of the to store better also a There in

momentary to frankly was that cetera see et you in sales quite spiked. around And getting I'm confident theft respect. we very with that that a did store a So that of our not do just their a It team hands that. normal would is oversight disruption shrink measures with

all an we shows line. I also was while tremendous this decision the to being bottom are bringing feel good right expense think about the savings net I scores and the time that where high promoter So

Great, you've are know I items. ask rollout. there's towards bit could the points introduced thanks. little if know points strong. customer if higher some broiled I'm And to curious speak price to wanted customers I those point you response more subject then price know higher initial have you been I seen been that to said that a

and we Jason, had Broyhill pleased a introduced great tremendous life you basis. of we've I we've been point your price impact. to proposition date response the our to and ahead and we very plan And are value some very say would with points roll customers know that seen higher little on for out no to negative

fact our $XXXX several in know stores we sectionals that are In point. that you have at price

we again been have us. for well And very performing

are of we what In proposition just were price those feel early been have similar also strong. confident be component within But with we and early resin our incredible Broyhill introduced from situation Now we the the about really points see. indications will we'll home year. very excited value that soft indications furniture patio very out wicker April our slightly we've rolling higher and last we're where

but you your have in tax add implied And XXXX? and say for missed if the interest one this could more thanks. the I expense I what is Great could might guidance rate

weren't non-recurring bit in to specific. we at be had we least And some we then levels. will what will be did expect one down XXXX up debt as due right. Jason a the interest benefits say tax rate to be net lower time would We expense

a So up little the will be tax rate bit.

Thank right. All you.

You're welcome.

Okay. instructions. you everyone. call Operator Thank the with please replay would you close

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