Q3 2019 Earnings Call
Good afternoon, and welcome to shoe carnivals third quarter fiscal 2019 earnings conference call.
Today's conference is being recorded is also being broadcast via webcast any reproduction or rebroadcast of any portion of this call is expressly prohibited.
Managements remarks may contain forward looking statements that involve a number risk factors. These rich risk factors could cause the company's actual results to be materially different from those projected in such statements are forward looking statements should also be considered in conjunction with a discussion of risk factors, including the Companys ICICI filings in todays Ernie.
A press release and.
Investors are cautioned not you place undue reliance on these forward looking statements, which speak only.
As of today's date the company disclaims any obligation to update any of the risk factors sports you publicly announce any revisions to the forward looking statement discussed on todays conference call for contained in today's press release to reflect future events or developments I would now like to turn the conference over to Mr. Clifford.
Our skews me Mr., plus Shepherd, Vice Chairman and Chief Executive Officer up shoe Carnival for opening comments Mr. Sir you may begin.
Thank you and welcome to shoot Barneys third quarter 2019 earnings Conference call.
Joining me on the call today, as Mark Ordan, President and Chief Customer Officer, Kerry Jackson, Senior Executive Vice President Chief financial and administrative officer.
On today's call I'll provide a brief overview of our third quarter operating highlights themselves results as well as review our fiscal 2019 outlook.
Mark will update you on the progress around our customer Centricity initiative, and Terry will discuss the financial results in more detail then well open up the call take your questions.
I used to report comparable store sales for the quarter increased 3.5% on top of the 4.5% increase the third quarter last year.
This increase was driven across all merchandise departments at both the athletic and non athletic categories and of course all cells channels.
Each month of the quarter delivered positive comparable results, we generated as our 17th consecutive year of positive comps for the month of August demonstrating that shoe Carnival remain so storm choice for shoes during the back to school season.
This year's August comp increase of 3.3% was on top of the 6.5% increase in August last year.
Customers Trust Us I have the latest Koreans from the best friends and death throughout the year, our commitment to merchandising our stores based on the unique and differentiated customer demographics of each store has always been our focus now with the initial implementation of our CRM program.
[laughter] customize our communication each customer based on their individual shopping preferences, Mark will provide greater detail on this initiative and just a moment.
Ended the quarter with inventory up 1.4% first store on a personal basis as our team continues to shift receipts earlier to avoid any possible future increase from tariffs.
Our merchandise margin was up 50 basis points. The last year. They didn't know expenses decreased 20 basis points as a percentage of sales and ask you have made was flat.
And then just sales compared to third quarter last year.
That's a result operating income increased by 70 basis points as a percentage of sales and yes, well the quarter increased 23.7% to 94 cents per diluted share the highest quarterly diluted E. P S and the company's history.
These positive results give us confidence to increase our fiscal year outlook.
Focusing on third quarter comparable store sales by Department Womens non athletic was up mid single digits on a comparable basis.
We're pleased with the positive comp performance, a women's dress shoes, which produced a mid single digit sales gain and sport casual produced a high single digit increase and once the weather turned more seasonal later in the quarter, our fashion boots generated positive results.
The men's Nonathletic department can tend to generate strong results posting a mid single digit comparable store sales increase.
Our merchants have done an outstanding job building, our assortments for both everyday were and work furthering our goal of making shoe carnival is destination for men's footwear.
Shoe Carnival means I go to score for children shoes, the children's footwear Department posted mid single digit increase for the quarter on a comparable basis. The cells increase was broad based including both boys and girls product categories, and both athletic and non athletic departments.
The adult athletic continues to be there continues to be a shift from performance categories to more casual categories. Our merchant team has done a great job are recognizing this shift in preferences, resulting in slightly positive comparable store sales.
I would now like to give an update on our financial expectations for fiscal 2019.
As I mentioned earlier once the weather became more seasonal we saw an acceleration in our seasonal boot categories across all departments themselves channels.
Seasonal foods account for approximately 25% of our total footwear sales for the fourth quarter and we expect the positive wins that we've experienced since your robl of cooler seasonable weather to continue through the balance of the fiscal year.
I just want a year to date results, we are raising and tightening our EPS guidance from a high of $2, an 83 cents to a range of $2, an 85 cents to $2.89. This updated guidance represents an increase of 16% to 18% compared to our actual U P.
Yes, I have $2.45 for fiscal year 2018.
In addition, we now expect total net sales for the full fiscal year to be isn't a range of 1.033 billion to a billion 36 million, which is a high in the bar previously stated guidance. Further we continue to expect a low single digit comparable store sales increase for the year with that.
Overview I'd now like to turn the call on for Mark Ordan Mark.
Thank you close it's a pleasure to be speaking with you on my first earnings call Clinton Kerry I've enjoyed getting sleep. Many of you get from the investment community since joining the company is 2018.
She's carnival is generated consistent results over several years as Cliff mentioned, we deliver on every day family footwear needs. It was consumers count on us most for seasonal or special occasions, we have that they're looking for we believe this strong foundation with consumers is just the beginning or.
Over the past year, our team has made significant progress on our long term strategies, our customer centric organization is focused on the lighting family channel shopper and creating sustainable long term growth for our shareholders.
Today I'd like to share an update on four of our core strategic imperatives fueling our growth.
First CRM second brands' third e-commerce and for unrealistic.
Over the past 15 months, we've shared on Tuesday, asking about World class CRM platform. We are building I'm excited to share that the CRM implementation phase has been completed ahead of schedule.
Our team has already begun to capture actionable insights and enhance value for our consumers.
The new platform provides our marketing merchandising analytics and real estate teams with a holistic view of our customer shopping behaviors. This in turn helps us identified tomorrow, most valuable customers and deploy resources toward building long lasting loyalty with them.
A few early CRM wins include with new customer insights, where we were able to build customer engagement plans that has grown our loyalty program membership, 11%. This year, so over 23 billion loyal numbers.
Most valuable lifetime customer is our shoe perks gold member generating on average over $15 more per transaction interfaces oil you remember transaction value.
The focus marketing activities, both membership was up over 50% year to date and in Q3, we grew sales, but this group by over 20%.
Our teams are capturing new shopper insights, giving us confidence in our CRM capabilities fueling profitable growth for multiple years ahead.
The second core strategy is to build shoe carnival brand awareness and preference within the family footwear child.
During Q3, we launched our first fully integrated campaign with our agency of record Mccann that's right.
This new marketing campaign in combination with our strong merchandising resulted in our 17th consecutive year of comparable store growth during back to school.
Growth was driven by increased traffic in both our bricks and mortar stores and E Commerce platform, resulting in a high single digit growth rate of customers shopping a shoe carnival during Q3.
Store conversion continues to be a long term success driver growing low single digits for the year with growth every quarter, demonstrating the excellence our store operators and are buying organizations.
The third strategic imperative I'd like to provide an update on today's ecommerce. Our short term objective is to grow our online business over 10% of our total net sales from approximately 7% today.
We launched our online business in 2012, and since then have been rapidly building capabilities that are driving customer traffic growth and conversion growth online.
I'm proud to be acceleration, we have achieved with our online growth plans for 2019.
For opening and repositioning stores to capture customer shopping preferences as a core strategic growth opportunity.
In Q3, we opened a new store in Jeffersonville, Indiana, we rebuilt and store in Panama City, Florida.
That was destroyed by hurricane in 2018, and we repositioned to store in Peoria, Illinois.
Customer responses in early sales performance at all three stores are very encouraging.
With our CRM implementation phase now completed we're able to mind for and leverage new insights to resume profitable new store growth.
That's part of our strategic initiatives were pleased to confirm our plans to open six to eight new stores in 2020.
Eight cents, while new stores in 2021.
The strategic plans are focused on growth within our existing 35 states geographic footprint.
Finally, our customer centric focus and strategic progress during 2019 reinforces our confidence in delivering increased annual earnings per share outlook clip shared with you.
I'll turn over to Kerry Jackson to provide more insight into our financial performance.
Thank you Mark.
Net sales for the third quarter ended November 2nd 2019 decreased 5.5 million to 274.6 million compared to third quarter last year.
This increase in net sales 9.2 billion, that's true 2% to 3.5% increase in comparable store sales.
1.2 million was attributable to the for new stores opened since the beginning in the third quarter fiscal 2018.
This was partially offset by lost sales of 4.9 million from the 13 stores close and other non comp stores what was the same period.
Our gross profit margin for the quarter, 30.9% compared to 30.2% <unk> third quarter last year.
Our merchandise margin increased 50 basis points during this quarter.
Buying distribution I could see spend decreased 20 basis point as a percentage just now.
The increase in the merchandise margin was primarily the result of increasing sales of non athletic product, especially womens non athletic, which carry a higher margin dinner and late category.
The decrease in buying distribution expenses as percentage of sales was the result of more distribution costs.
And the leveraging of expenses against the higher sales pace.
As you know expenses increased 1.4 million as the third quarter fiscal 2019.
<unk> point Sixmillion.
As a percentage is net sale. These expenses were flat compared to that third quarter fiscal 2018.
Significant changes in has seen a few threed included increases in payroll incentive compensation and fleet. This in store closing impairment charges.
Which were partially offset by decreases in equity compensation depreciation advertising and operating fewer stores during the quarter.
The effective income tax rate <unk> third quarter fiscal 2019 was 24.9% compared to 25.9% for the same period last year.
Primarily related to the reversal of valuation allowances on third and the wells that we now expect to utilize.
Full year up this between 19, we expect our tax rate to be approximately 21.3%.
Compared to 24.3% last year.
The reduction in the annual tax rate. This year was a result in the Q3 hundred personal evaluation allowances and a $1.9 million tax benefit related to the best thing equity based compensation in the first quarter. This year.
Net income for the third quarter was 13.7 million compared to net income of 12.0 million last year.
Earnings per diluted share <unk> third quarter increased 18 cents 94 cents per diluted share.
Weighted average diluted shares outstanding for the third quarter this year decreased 8%.
Now turning to your cash position information effective cash flow.
Depreciation expense was 4.3 million in third quarter.
Depreciation expense is back to be approximately 17 million for the full fiscal year.
Capital expenditures for fiscal 2019, including actual expenditures during the first nine months as the year, our expected between 18 and 19 billion.
Approximately 11 million to be used for new stores relocations, remodels and to purchase the <unk> corporate headquarters.
In the third quarter. This year, we repurchased under our share repurchase program 528, 521800 shares of our common stock at a total cost of 16.9 million.
For the first three quarters of this year, we've repurchased approximately 933000 shares at a total cost of 30.9 million.
We currently have 19.1 billion bill remaining available under 50 million dollar share repurchase authorization.
We continue to expect diluted weighted average shares outstanding for the full year fiscal year to be approximately 14.7 million shares.
My final comment they will be adding a little color on our financial expectations for the fourth quarter.
Implicit in our annual sales guidance is the expectation over Q4 sales to range from 236 million to 239 million.
This compares with Q4 sales last year, a 234.7 million.
In addition.
Hi end of our earnings guidance, our expectations for Q4 include a low single digit comparable store sales increase.
A flattish gross profit margin.
Healthy leveraging of our as Janet.
Diluted earnings per share are expected to range from 18 to 22 cents in Q4.
Compared to 39 cents in Q4 last year.
This concludes our financial review now I'd like to open up the call for questions.
Callers over the phone if you'd like to ask your question. Please signal by pressing star one on your telephone keypad, if you're using a speaker phone. Please make sure sure. Your mute function is turned off to allow your signal to reach our equipment again press star one to ask a question well pause for just a moment to allow everyone and opportunistic for questions.
Our first question comes from Mitch Kummetz with pivotal research. Please go ahead.
Yeah. Thanks for taking my questions and also congrats on the quarter carry let me let me start where you ended on the on the guide I just wanted to clarify so you're saying that the high end of your Q4 range. There's a low single digit Cobb flat gross margin and us and substantial question I leverage I'm curious is there are.
There are there assumptions embedded on the low end. It if there are do you care to share those with us.
Well, you can take a little bit <unk> or anything so we didn't up on the low end on the sale you.
You could end up with a flattish to slightly down gross profit margin and we'll probably.
Would not have quite as high leverage was still be leveraging our S. You name because as the comparisons.
I wanted to be quite as high as it were expecting.
Okay, and then you guys raised it so you raised the sales outlook for the year, but you're still saying kind of a low single digit cop on the full year right. So are you is the.
Do you now expect so so I'm not sure your definition of a low single digit copies of the say like maybe one or 3% or you're not expecting something more more towards the higher and over the range of low single digits is that the reason why you raised the sales guide by a few million for the year.
Yeah.
Well keep in mind, that's a flow through primarily of what we saw come through in the third quarter, we exceeded what our expectations that then on the third quarter pulling it through the year.
Okay.
And then can you make any comments on Q4 to date. We're you know two plus weeks I guess another quarter, you talked about improving trends on the boot side is there can you give us any numbers around kind of how you're trending.
Yeah.
Well, we're just not going to give a fourth quarter to date, then, but let me tell you know we used the number one reason why is that.
Thanksgiving moves out of the third week of them or into the fourth we couldn't have been burden that the that changes a lot of a lot of metric. So we're gonna stay silent and and tell you that we expect low single digit increased for the fourth quarter.
Can you talk little about that calendar shift if I'm not mistaken I think the last time, we saw Thanksgiving on the 28 was in 2013 or and if you have any recollection as to how that impacted your fourth quarter results here.
I don't know I'd have to go back and specifically look in fact carry is looking at that right now or is it that creates though.
One week less between Thanksgiving and Christmas, which doesn't affect the should that business there as much as it does the department store business at the has a pretty good effect on the department store business, but not so much in shoes.
Okay, Okay, where perks sounds like that's where we're more concern in the fourth quarter about weather trends, we are about sharpen your ship.
Sure and then speaking it whether on on boots. So I just want to be clear as to what you said about the third quarter and I want to ask a little bit about your Q4 outlook there Brian third quarter, I think you said that that women.
Fashion boots were positive I wasn't sure if that was a comment on a quarter itself or or a belt was going to.
What I said it was as we as a weathered got cooler throughout the quarter.
The women's boots turned positive okay, well I might have said less positive once it turned cooler.
We we were not positive early in the quarter.
In boots, we needed the weather does change and once it didn't change the customer didn't show up and start buying but.
Can you can you say, what boots were for the quarter, where they down for the quarter, where they is or just sort of an overall boot.
Number that you could give us.
[noise] about that if you look at our overall boot business. It was flattish, but that would include okay mens or womens fashion boots were slightly down.
Okay, and then I guess it was just lastly on your outlook for boots in Q4, I think you said that seasonal boots were our 25%.
The total is that just the weather dependent I guess, all boots or weather dependent to some degree but is that like more like insulated boots is your overall boot business bigger that's not something up.
What I'm trying to to say in that and maybe I need to figure out a way to clean it up is that excluding work.
Okay. So if you looked at whose ball for for everyday were fashion that that's a approximately 25% of our total.
Fourth quarter of footwear sales.
Got it alright, okay, thanks, guys I'll get back into queue.
And our next question comes from Greg Pendy with.
Dotty. Please go ahead.
New store guidance that you gave was that or is that just the new stores own beacon expects that its Greg that's awesome.
Greg I'm afraid that the first part of your question was less muted. So if I can get should ask it one more time.
Sure can you hear me now.
I can hear you find out.
Okay, Oh, sorry about that I just wanted to understand on the new stores was that just new stores or is that the net of stores and store closings I think you're targeting six to eight new stores in 2020, but can we expect that to be offset by some closings.
Hi, Greg you're right those are new stores, we're talking about their six days the range of new stores.
And that eight to 12 for 20 821.
And if we look into that.
If you look further into that trends, who we are.
Forecasting.
Well I mean to net store growth towards the end up 2021 or into early 2022, depending on the success of finding a highly productive highly profitable sites in markets. We know we can win what.
Okay, and then can you just talk a little bit about as you're evaluating these new stores, what you're seeing in the real estate environment for these new stores and how you're thinking about that.
Yeah, we're focusing on our 35 corestates first of all where we know our shoppers very well and where we are a strong propensity to succeed was brought we're finding in our core markets.
It is a challenging market place to find a robust.
Opportunities.
Because we're being incredibly selective to find ones, where we know our shoppers are so the overall perspective here, we're going to say really focused on finding stores. We believe can be accretive to our revenue per door averages and accretive to our profit for the corporation long term.
I can and Greg if I can add to that is up there their sites out there, but we're being very very selective and that's one of the things that CRM is brought to US is that we know exactly.
They have a very.
Real idea as to who our customer is a new shopping our stores and so we're we're making sure that the sites there have been brought us or real estate team <unk>. When we go out to visit those stores, we make sure that the demographics and the customer profile in around those stores match exam.
Please do we are.
Okay. That's helpful. Thanks, a lot.
Uh huh.
Our next question and the Q comes from Chris Svezia with Wedbush Securities. Please go ahead.
Good afternoon, everyone. Congratulations on a quarter on and welcome Mark to the conference call.
Thank you Chris Thank you.
First Cherry for you just want to see.
We think about Q4 remind me again what that Tom.
You know by month once you're up against just walk through that if you can.
So last year, our November was up high single or December was not in December and January <unk>.
Most samples and we ended the quarter up four seven.
Okay.
Okay. Thank you and then.
This is mark for you.
No no CRM I'm, just trying to I know you went minds.
Corner I know you've been getting incremental wins you know throughout the year I guess was there anything material that developed during the corner that trona comp acceleration you see the loyalty program you talk about your gold membership growth. They are you, saying he did maybe that you suddenly was incremental in terms of.
Coming on that CRM War, we're now.
Absolutely, Chris they're able to capture multiple quick wins, one I'd say as.
We're able to utilize the data to understand the shoppers who used to shop, the corporations that no longer exists in our competitive space and try to communicate to those supposed to help them understand we're we're a new alternative for family footwear.
When they used to shop at a place that no longer there that was really very profitable.
Use of our early analytical data this quarter.
I'd also add to that that are that we saw an increase in traffic from our gold members. So that not only do we are we able to attract new members, but the art art art, most loyal customer, which are a gold members a shopped us Oh, we saw an increase and and bass.
Cut size from them as well.
Okay, that's great good to hear.
I want to go just not from a product perspective.
Just on.
On the Atlanta.
Senior slight increase.
I know you're talking about this and shifts to pass along technical last night at.
What's sort of your thoughts about the outlook as you go into Q4 and maybe early next year by the end color about Q4 and someone else.
I've got mobility of certain product becomes more height or whatever the case I'm trying to continue or something.
To change it back in Q4.
But I definitely expect the casual trend that we've seen over the past.
Couple of quarters to continue and maybe even accelerate a little bit. However, I also think that as we head into 2020.
And the product that we've seen a ended at all like to talk categories and or or or brands, but the product. We've seen very encouraging and not I believe we're going to see a continued growth out of the athletic maybe not.
I think we'll see growth out of the casual categories, but I think you're gonna see or even the technical or.
But we would consider to be technical or accelerate as well.
Okay got it and then just on.
And just kind of my question just on on that on the dress category performing well any I know it's been bodied everybody had some recent success just kind of what's driving that or any color you want to Uh huh.
Well you know [laughter] doesn't the.
Six months ago, I would not have told you that in the third quarter, our dress shoe business would be good. Okay. I did so that was a.
But I'm not can pay a college by surprise I'm just couldn't pay our merchants the incredible job.
Of Ah going after the right item and and I don't want to get specific on the categories that are selling because it got.
Competition as you know listen to this call, but I was.
Very pleasantly surprised to see our our women's dress shoe business accelerate the lay it did.
Okay final thing for me just on a.
Marching question and just the HM.
Just curious how do you think about different sheets fashion boots, and cold weather boots, and once you song corner in your expectation Q4 and carrying why.
Like flat.
Gross margin you pump up low single each assuming the merchandise margin is down and that's just because it difficult comp aren't sat predicated on how well the boot business performs.
Chris I'm going to take the easy question, which is what Airbus a different queen fashion boots and all other <unk>.
When I when I say, when I say fashion or seasonal boots, well I'm doing is excluding work that the.
You guys don't really want to know about work because that's an ongoing business for US you want to know how to fashion business, which is where the all the risk is so.
When I when I talked about fashion boots for seasonal boots is it really is just excluding work.
Okay.
Many different seen it she was the machine a fashion, which is like a I can.
Oh person.
No I, probably just when it gets worked.
Just probably no I include cough cold weather into that because you know that that it's crossing the line. I mean does would you can include Bourbon just as cold weather or would you say cold weather strictly.
Cold weather that keeps.
You know dampness away from your foot.
I don't know so that's what we've the there's anything that's not work that Surfaxin boot category.
Okay and Washington.
So.
Chris we're expecting to be 11 Jersey, and that's been or a flattish gross profit margin. We expect this season, leveraging Adam are buying distribution oxy cost on that.
On a little more cost base in the year before plus having to young customer sales increase we also expect still there's two parts of our merchandise margin <unk> actual.
Sale and cost is the shoe.
Then we have some accounting adjustments, we have to add into one of them as you have to capitalized cost into the cost of the shoe.
As your inventories you're increasing those reserves increased along with it we're expecting a do operating fewer stores and good morning or per store inventory. They have actual total dollar inventories down.
At the ended this year versus last year, that's reversing out symbols capitalized costs that we had a crude and current period.
Into Q4, and causing that to be so the overall merchandise margin bleed down because it was accounting adjustment, even though we expect.
Sure.
Cropping on to sell the shoe to be Oh, well year over year basis.
Okay, I think I got it.
Okay I got it. Thank you all know that's kind of thinking it. Thank you Chris.
Once again, if you'd like to ask a question. Please press star one.
And we'll take our next question. This one comes from Mitch Kummetz with pivotal research. Please go ahead.
Yeah, I've I've got some follow ups so.
First of all I didn't catch if I didn't hear what you said about adult athletic I think maybe especially just said it was up slightly in the quarter or what is what was it up and of course it up in the quarter.
Adult Athletic was basically was dead on flat.
It was I'm sorry, it was flat.
Flat that's correct. Okay. Okay. So the I think that's a slight improvement from last quarter right I think last quarter was down slightly.
[laughter].
I guess, if somebody really my question I I I find interesting that you're you're talking about 2020, any like you like what you're seeing on the product side for 2020.
Correct me, if I'm wrong, but I kind of feel like going into this year you guys were pretty bullish on what you were seeing product wise as well on the athletic side and it seems like two of your more important athletic quarters Q2 in Q3 didn't really play out as well as maybe you would have anticipated going into this year I'm. Just wondering if you could do like a post mortem on that.
What is it I don't want say what went wrong, but did did did that not little to your expectations.
And if so why is.
Good thing that's a great question, we work we work side of the coming into the year on skate and and we expected as we entered into the second half a year.
For a certain brands to street than we knew that.
We knew that we have brands that were not going to be strong for the for the first half a year, but we expect to the other brands to the strengthened as we headed into the second half the year and [laughter] and I really don't Wanna get specific on whether that that ran disappointed us or or came along but I am going to be honest with you.
I think that I think what happened the fact that athletic was flat and we show the 3.5% comp store increase for the quarter shows the strength of our shows the strength of our concept that as you know customer shift from one category to the other we can take advantage of that and I believe we did.
Okay.
And then on on Payless, I think last quarter, you guys talked about how it didn't really how much of an impact because they tell us whats dumping a bunch product into the nurse their customer kind of went away for a little bit because they weren't didn't have much of an appetite to buy after that and but you were kind of expecting them to kind of come back. This quarter. I'm wondering if you could you talk about the impact of Payless is there any way to kind of.
Break out your comp versus.
First as you know stores that overlap with.
Well then open the line sort of break out to comment back in the values are sure I can tell you is that our comps within a I'm not a breakout comps.
But the tween overall pay less amount over the last but I can I will tell you is that the stores that are work closest.
So where payless store was within a within a mile or two mile.
Radius, a those stores had better self results in the stores that were more than five miles away from a pay local store, but you've got a reminder, payless head that lot of stores. So [laughter] work there a lot of our stores I'm sure a lot so.
It does that we're sorry, yeah in the stores that you overlap did you see any real difference in terms of how you cost by category I think when you're talking about I know that you know from price point standpoint, there's only there was only so much overlap Brett I think you'd said that you thought you could that could benefit you in athletic side, a little bit maybe some other sides maybe work I'm not sure did you see.
Could help you.
I think that minutes into this and dress shoes, you know how can we were asked earlier bar dress shoe business was up we we think has to pay less effect you know they sold a lot of dress shoes.
Yep.
Okay. That's helpful and then on a on on Boots Im just curious in terms of.
It sounds like this are probably a little worse or what your thought on the quarter. I know you had a tough comp last year I know what the weather was doing how do you feel about your boot inventory do you feel like there was any risk or can you just sort of shut off the spigot if need be can you probably pushed things back to your vendors and then how do you think about just sort of channel inventory for boots more broad.
Outside of kind of what you guys are carrying.
Well.
I think maybe you're asking me if that's gotten more promotional that's a way of asking me if there's more promotional we haven't seen that yet our boot inventories in great shape and <unk>. The reason for that right because the way we run our business is that we bought what we what we need upfront and then we placed backups and this does but at the.
Boost don't take off the way we originally thought they were going to the sale then those back up and cancel button and and were aggressive on that as we go through so I bought the inventory is in great shape and I guess it merchants are all the credit world If you because I.
We had a we had a decent a third quarter in boots.
Well I actually had a flat third quarter Imbues, we're having a pretty decent fourth quarter and boots and I think we're gonna get good shape.
Okay, and then last question maybe for Kerry I know that you guys said, you're a three three CCOP and August I don't know if you can tell us October price I'm, sorry September and October I'm guessing October was stronger than September just from a weather standpoint, but.
Sorry, we saw was a September was in a low single digit comp increase not who we sell to read into the mid single digit comp increase.
Okay, Great alright, thanks, guys.
Thank you [noise].
Our next question the Q comes from Sam Poser with its Su Kim <unk>. Please go ahead.
I just went to work for a new bank apparently congratulations.
[laughter] Domino corridor, that's quarter I've ever seen from you guys [laughter] like Sam I wish I don't know.
[laughter] makes any comments, but anyway, let's keep moving [laughter] I want to follow up.
How many stores are you planning and closing next year. The following year could you just give us.
An idea you said you're going to be net opening.
You probably would be that opening baby and 21.
But next year I mean can we expect you're going to that flat or net close.
Could you give us some idea.
This is gonna be a net flat.
This is where were where our thoughts are now and we haven't talked about that as it is as much today, San because we're working really hard but to actually show store growth for next year, and we've been but I mean, they were going up the auto it we're not if we're going to model. It it's better moderately again model as net.
That's flat and then it has got an improvement and then the following year right I mean, what like net five open would probably be a good starting point.
Or you think right now except that tell you. The following year. It was maybe a little lower than that it somewhere that flat.
The thought.
Okay. Thank you and then can you talk about can you talk about the like your exposure given the Adam I guess the CRM in the second but couldn't you given the CRM and given what you're learning from it with the new stores can you talk about what that productivity expectation will be for.
Those new stores that you open with the new information that your that you're.
Garnering.
We would fully expect that a new store within a.
Reasonable point in time.
[laughter] your let's say between does your three Oh, well around your three or to be at a company average.
So you don't expect those to outperform given the new information and open faster and like open stronger.
Because of the new manner by which you are taking the patients in the man. It really depends on you know Sam as a difficult question because it depends upon where yet where are you opened a store what we've found what we found this years and may have an open many stores, but where we opened up towards where they already know list. They are outpacing the that they outpaced our.
Our current crop Uh huh.
Well there.
No.
If they know who you are the work right work shows itself more quickly.
That's right.
That's fair Okay.
Or how much help.
I know, you're just kicked off the CRM sort of in earnest this quarter, but if you if you could I know it and I know this isn't a this is going to be scientific but.
How much do you think this in prove communication with the customers vis-a-vis the CRM helped your comp in the quarter.
Hi, Sam it's a material contributor and a diagnosis I could give you. This if you look at our shoe perks gold members as a shirt earlier that membership grew 50% plus for the year.
And if we look at the comp with acro.
They are growing at a rate more than two times faster than our total company property. We just did so said differently. The insights are allowing us to bring consumers into our loyalty program rather than trying them up to our highest cheer are most valuable location and their comps are growing.
At a pace, we're extremely excited but.
Cool I have a few more one did you buyback any stock after since quarter end.
It would be reported in the Q.
No because we didn't know we're locked up until after we released earnings so.
We weren't we were in a blackout period until after the release of earnings so you're not allowed to buyback.
Okay.
The athletic business Cliff do you when do you foresee that on a year over year basis sort of gaining momentum a you know no turning around given as Mitch brought up you know the expectations coming into the year and sort of what you've learned in the meantime.
Yeah, I think that that's like.
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Let me say this we're.
As we looked at new product for for spring of 2020.
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Excited about the things that we're seeing from some of our top vendors.
One of those it as there's a problem from that though with wet by chance.
Mitch as point, we were we were we were no I'm excited about entering into 2019, but Uh huh.
And as you know weve.
We've been flattish all year with athletic so I'm Oh.
I feel good about it I can tell you that I feel really good about where shoe carnival is right now with with their customer and the fact that set not many people are reporting increases and traffic to the increases themselves. The way, we have and based on whatever happens in the spring of.
2020, we'll be prepared and we'll move with the customer as quickly as spot.
And.
Just mentioned your traffic in the stores for the quarter were up or not.
Traffic was up Sam is both bricks and mortar enter online labor pool six okay.
Conversions.
Okay cool congratulations on that two more questions furry boots are how does it how you doing with them hasn't look I know that that's some fashion. Some weather. So any initial initial read on free boots.
So far were no were not unhappy with very boots, then that impact the.
That's probably as close as I'm going to get the talking about product categories [laughter], Okay, and then and then alright. So you brought in some product earlier in the quarter, partially due in two to offset tariff, but wouldn't but it's going to be hard to offset parents and we're still waiting to find out if the December 15th ones happened, but assuming they don't.
When you're looking at.
You're looking at tariff impact into next year or prices that you're seeing if those that that additional 25%.
Happen.
Can you can you give us or an idea of the of the magnitude of the increases and the progress you're making.
With factories in vendors and so on and so forth.
So so far and we've talked about there's quite a bit internally. So far we haven't seen a lot of price increases we didnt have a major vendor that you're familiar with it did.
Is to across the board price increase and we were able to mitigate that somewhat by by the product. We bought you know.
Some product is worth more than than others, and so we were able to I think in my mind able to mitigate that price increase but we haven't seen a lot of price increases I think I think the majority of the vendor community is is waiting to see exactly what happens you know the good news wasn't athletic is that the majority of the athletic.
There are made and Vietnam not in China. So that's 52% of our total volume so not not not saying a lot there are not feeling a lot in any of the other than the one brand I've talked about I'm, not saying a lot increases.
And at this point out you're on your dress women's dress product to be most of that is non weather and most of that would be impacted by the decision by the by Ah before be tariff and right and so everybody sort of holding their breath on that is sort of how to think about it.
They're holding their breath on it at this point and you know orders had been placed.
With the cost.
Given so.
No Sam I don't expect that we're going to we're going to infect Carl nor myself thing, we're gonna be affected at least in the spring time period the tariffs.
Alright, well. Thank you very much in can hidden success.
Alright, thank you.
There are no further questions in queue at this time I would like to turn the call back over to speakers for closing remarks.
I'd like to thank you all for your participation on today's earnings call.
We look forward to invest in our fourth quarter and full year results in March.
I also want to wish each of you a break Thanksgiving and I'm very happy holiday season of right evening, and thanks again for tuning yet.
Thank you ladies and gentlemen. This concludes today's presentation you may now disconnect.
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