Q4 2019 Earnings Call
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Good afternoon, and welcome to shoe carnivals fourth quarter fiscal 2019 earnings Conference call. Today's conference is being recorded and it's also being broadcast via webcast any reproduction or rebroadcast of any portion of this call is expressly prohibited management's remarks may contain forward looking statements that involve a number of risk factors. These risk factors could.
Calls the company's actual results to be materially different from those projected in such statements are forward looking statements should be considered in conjunction with a discussion of risks factors included in the Companys FCC filings and todays earnings press release investors are cautioned not to 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 their risk factors or to publicly announce any revisions to the forward looking statements discussed on today's conference call are contained in today's press release to reflect future events or developments I'll now turn the call over to Mr. clips suffered.
Vice Chairman and CEO of shoe Carnival for opening comments. Mr suffered you may begin.
Thank you and welcome to shoot so until 2019 fourth quarter and full year earnings Conference call. Joining me on the call today is more important president and Chief customer Officer, Kerry Jackson Senior Executive Vice President Chief financial and administrative officer on todays call I'll provide an overview.
Our 2019 fiscal year. This fourth quarter result, as well as the ongoing code bit of 19 Pembina.
Mark will then update you on the progress we've made on our strategic initiatives follow Buckcherry who'll discuss the financial result in further detail.
Well then open the call for your questions. Let me start with the business update on the impact as close as 19.
As you saw in our press release last week, we made the decision to temporarily closed our stores until April 2nd while this was not an easy decision the health and safety of our employees our customers and the communities. We serve as our primary concern as noted we will continue to pay our.
Yes as scheduled during this time and serve our loyal customers through our website.
For E Commerce order fulfillment, where allowing our managers to fill fulfill orders from our stores and locales where that where we are able we are hearing to guidelines from the world Health organization and the CDC as wells practicing social distancing we have also implemented.
Yes cleaning in sanitation processes to ensure the safety of our employees today, and making sure our customers still say when we reopened our stores in the future.
The rest of the spread of this virus has far reaching implications for our global community and while we anticipate that this than debit will have an impact on our operations today, we're thinking about those who have been affected by this deadly bars and the continued having it is causing within our communities.
Our store closures, we believe are necessary step for us due impart to prevent the further spread of this virus.
From an operational standpoint, we have been working closely with each of our vendors to determine the full impact to our supply chain and we thank them for their collaboration as we navigate this unprecedented situation.
Best in class merchant teams have been diligently managing inventories to ensure that we are keeping things at a controllable level. Furthermore, we are working to control costs, where possible, including reducing SDMA to preserve margin and capital expenditures to maintain our flexible flexing our finance.
I will flexibility.
Supermall has a long history of navigating through various difficult second cycles, both good and bad our team was incredibly disciplined and able to move quickly as conditions change. In addition, we have always maintain a very strong financial position and balance sheets for times just like these at the.
End of February we had $57 million in cash and ample liquidity liquidity with our $50 million credit facility.
Well today there are there are many unknowns, we are monitoring the situation closely and we feel very well compared to meet the needs of our stake holders during this difficult time.
Now turning to our fiscal year 2019 results.
We reported another record year for shoe Carnival sales rose to a billion 37 million, while net income increased 13% to 42.9 million.
For $2, a 92 cents per diluted share both exceeding our expectations at the same time comparable store sales increased 1.9%, marking the 11th consecutive year of comparable store sales growth.
Last year at this time, we've talked about our journey to enhance our leadership position the family footwear channel shoe Carnival has one of the most distinct brands in the space with a well tenured buying organization that has a proven ability to see trends well ahead of others in this space.
In addition, our unique selling concept has distinct bran advantages and our assets.
And assets at resonate with our consumer.
Setting us apart from our competitors.
Despite the challenging times, we are facing our team continues to focus on four key initiatives our CRM program.
Our brand and customer experience.
Online sales and store development.
To date, we have made tremendous progress on all fronts, but I would like to take a few minutes and talk about the success of our loyalty membership program shoe perks, which underscores the investments we've made in our CRM initiative.
In 2019, our loyalty program grew double digits, resulting in the sales growth of over $35 million versus the prior year and now exceeds 23 million members. This equates to a mid single digit sales growth for the program in 2018 compared to.
The two company comparable growth of low single digits for the same period, even more promising as a growth of our gold tier, which posted double digit membership growth and comparable sales Mark will provide greater detail on this and our other initiatives in a moment, but suffice it to say we.
We're very encouraged with the success, we have had thus far.
Moving to our financial results for the fourth quarter of 2019, which capped off another strong year for shoe carnival during the quarter conversion average transaction and units per transaction. Each grew low single digits and we ended the fourth quarter with 392 stores in 35 states in Puerto Rico.
So close in six stores during the year.
Looking at comparable store sales by department for the quarter Womens non athletic was up mid single digits, driven primarily by strong demand and women's dress shoes, partially offset by declines in boots, which were negatively.
Affected by mild winter weather throughout the quarter, excluding boots womens non athletic was up double digits in the fourth quarter Ms. Non athletic was up low single digits supported by mid single digit growth in casual shoes, and seasonal boots offset by declines in dress shoes.
Children's non athletic, including sandals casual and dress shoes continue to perform well, helping drive low single digit comparable growth.
Adult athletic overall, we're down modestly driven by low single digit growth in women's health athletic offset by men's athletic low single digit declines.
For the fourth quarter of 2018 merchandise margins were up 70 basis points, while biviano expenses were flat as a percentage of sales compared to the prior year, even more importantly for fiscal 2019, we delivered the fourth consecutive year improvement in merchandise margins drill.
And by favorable product mix of high growth categories. We are quite encouraged by these results as they demonstrate the capabilities of our merchant teams and leveraging our new CRM program to better identify seasonal trends enhancing the product selection available to our customers.
I'd also like to provide an update on our capital allocation strategy over the long term returning capital to reach stakeholders prudent remain a top priority. However, as we are still work can determine the full impact of the cobot 19 pandemic on shoe Carnival, we're focused on maintaining the financial strength.
The flexibility of our business with that being said we did not currently planned the engagement any further share repurchases during fiscal year 2020, but we'll continue to reevaluate the strategy on an ongoing basis at this time, we do not anticipate any changes to our quarterly.
Cash dividend policy.
Before I hand, the call to Mark I want to remind you that as we stated in our press release last week, we will not be providing guidance for fiscal year Twentytwenty given significant uncertainty created by Cobas 19, However is worth noting that as we began our fiscal year compare.
Double store sales through March 10th exceeded our expectations with comp store increase of 4.5% through that date from that point forward. We did see a significant decline in brick and mortar traffic leading up to our decision to close our stores, but we were pleased to see E commerce.
Traffic and sales have grown significantly mark will this discuss more in a.
A bit more in his remarks with that overview I'd like to turn the call over to Mark Ordan to provide an update on our strategic initiatives Mark.
Thank you Cliff during 2019 shoe Carnival made great strides advancing our four key initiatives CRM brand and customer experience online sales and store development.
We believe these four initiatives will drive long term profitable growth for the business strengthen our customer centric organization and extend our leadership position in the family footwear channel.
We're very encouraged by our customers response to our 2019 CRM initiatives.
We continue to see that insights captured by our customer analytics, coupled with our strategic marketing programs are supporting strengthened customer loyalty and ultimately the value creation for shareholders information collected through the CRM provides our marketing merchandising analytics and real estate teams with a holistic view of our customer shopping vs.
Theres.
In turn helping us to identify tomorrow's, most valuable customers and deploy resources toward building long lasting loyalty.
To put a finer point on this loyalty member sales grow over $35 million this year.
The average transaction value of members roughly $10 higher than that of non members.
I am most encouraged by the rapid growth achieved with our gold loyalty members, whose transaction value was over $16 higher than non members for the year and both sales and membership count grew double digit for the year.
Over the long term our strategic priority remains centered on driving member sales to over 80% of total company revenue as it has the most effective customer reach as well as the highest ROI amongst our marketing channels.
During 2019, the first year of the CRM implementation member sales as a percentage of total corporate revenue reached 70% up from 68% in the prior year and exceeding our expectations.
Next I will touch on our overall brand and customer experience initiative.
We're very proud of the customer centric experience we've continued to deliver.
This coupled with our broad product assortment for families were key drivers to achieve and our 11th consecutive year of comparable store sales growth.
Store conversion growth was achieved every quarter of 2019 by our excellent store operators across 35 states in Puerto Rico, underscoring the effectiveness of our store operators and our merchants.
Customer traffic during the fourth quarter and for the full year delivered growth exceeding our annual expectations with a double digit increase of customers shop and within the shoe Carnival Omnichannel.
Continuing the trend from the prior quarter customer traffic increased at both our bricks and mortar stores and through our ecommerce platform during the fourth quarter.
More specifically customer response to our marketing engagements during the quarter holiday shopping days was well above expectations as we saw strong omnichannel traffic results and sales.
We're also continuing to see rapid acceleration of consumer demand for our online shopping experience, which is our third initiative.
Online sales grew over 15% during the year and exceeded 8% of annual total company revenues for the first time.
Our online platform surpassed multiple engagement milestones.
Setting records throughout key shopping days throughout 2019.
In light of the current macro environment and our source being temporarily closed we're shifting resources and marketing initiatives for brick and mortar to E commerce to further accelerate our online growth trends.
While these are very early days I'm encouraged by the exceptional team effort to respond to the external challenges we're facing today.
Online traffic has exceeded our expectations over the past year, but over the past week, we've seen a steep acceleration of customer engagement online driving triple digit order increases.
Turning to our fourth initiative store development, we opened one store in close six in 2019.
While long term strategic new store growth remains a priority for us we are reevaluating, our 2020 and 2021 store plans in light of the uncertainty that exists today.
With that said our strategy remains consistent to open and operate stores within our existing 35 state footprint to maximize value creation and customer loyalty.
Finally, we're working closely across the organization from our corporate team to our store operators and employees to ensure we are once again able to serve our clients in person as soon as we can safely reopened our stores.
We believe the initiatives, we are executing our deepening our customer relationships strengthening our brand positioning shoe carnival for success over the long term well we are very cognizant of heightened uncertainty that exist. Today. We believe we are taking the necessary steps to mitigate the impact near term.
With that let me now turn the call over to Kerry Jackson to provide more insight into our financial performance. Thank you Mark.
Our net sales for the fourth quarter ended February one 2020 increased 5.2 million to 239.9 million compared to the fourth quarter of last year.
This increase in net sales was attributable to a 3.2% increase in comparable store sales and a $720000 increase attributed to the for new stores opened since October 2018.
Partially offset by a loss in sales of 3.3 million attributable to the 11 stores closed over the same time period.
Our gross profit margin for Q4 was 29.1% compared to 28.4% in Q4 of last year.
Our merchandise margins increased 70 basis points, while buying distribution and occupancy expense was flat as a percentage of sales.
The increase in the merchandise margin was primarily the result of being less promotional in Q4 other than the boot category and realized margin increases in our women's dress and casual children shoes and adult athletics.
And SGN expenses decreased slightly in Q4 to $65.1 billion.
As a percentage of net sales these expenses decreased to 21, 27.1% compared to 27.8% in Q4 up last year, primarily due to leveraging effect of higher sales.
Significant changes in SDMA for Q4 included increases the wages and employee benefits, which were offset by decreases in advertising depreciation and operating fewer stores during the quarter.
The effective income tax rate for Q4, with 28.8% compared to 25.1% in the same period last year.
For the full year 2019, the effective income tax rate was 21.6% compared to 24.3% in the full year 2018.
Our effective income tax rate decreased in 2019, primarily due to a 1.9 billion dollar tax benefit related to the vesting of stock based compensation recognized in Q1.
Net income for the fourth quarter with 3.5 million compared to net income of 1.4 million last year.
Earnings per diluted share for the fourth quarter increased by 15 cents to 24 cents per diluted share.
Weighted average diluted shares outstanding for Q4, this year decreased 7.2%.
Now turning to information affecting cash flow.
Depreciation expense was 4.3 million in Q4, and 17.0 million for the full year compared to 5.3 million in Q4 last year and 21.8 million for the full year last year.
Capital expenditures for fiscal 2019 were 18.5 million with approximately $10.4 million used for new stores relocations Remodels and the purchase of our corporate headquarters.
In the fourth quarter. This year, we repurchased 184000 shares of common stock at a total cost of 6.9 billion.
In total for the fiscal year, we repurchased approximately 1.1 million shares for common stock for a total cost at 37.8 billion.
In addition for fiscal 2019, we returned 5.7 million to the shareholders through our quarterly cash dividends.
To reiterate cliff's comments, we remain comfortable with their current level liquidity.
Our cash on hand, along with access to an additional $50 million from our line of credit.
Offers us the financial flexibility to run our business in this uncertain operating environment.
My last comment today is to remind our analysts and listeners that we won't be able to address any questions that relate to fiscal 2020 quarterly or annual sales earnings margins expenses were inventory positions in any greater detail than we've discussed in our prepared remarks.
Yes.
This concludes our financial review now like to open up the call for questions.
Thank you at this time, we will open the floor for your questions.
If you would like to ask a question. Please signal by pressing star one on your telephone keypad, if you're using the speakerphone. Please make sure that your mute function is turned off to allow your signal to reach our equipment and again not a star one to ask a question.
Pause for just a moment to allow everyone an opportunity to signal for questions.
Operator, we could take the first question.
We'll take our first question from Mitch Kummetz with pivotal research.
Thanks for taking my questions.
Hey, congrats on the quarter.
For the some of these might violate what would carry was just.
Saying, but let me let me let me try anyways. So so you guys are I think on day seven of this 14 days closure period. It sounds like digital doing really well if I heard you correctly, maybe it's up triple digits.
Since since you closed stores, but is there any way you give us some sense as to.
What the impact on sales and EBIT all looks like during this period of close stores, we like the first five or six days is there any way you can sort of frame that for us.
Mitch we're not going to comment at all on any forward looking activity in fiscal 2020.
We won't be addressing any sales margins inventory positions it.
It's just not foreseeable right now so we're not going to be addressing it on call.
Let me, let me try another one I want to M&A asking maybe in a different way so you're probably not going to tell me if you're going opened stores. After April 2nd but can you at least say.
So what you're looking at in order to inform that decision is that kind of based on CDC guidelines of what what's being said at the state and federal level Im sure its something you're going have to make that call and I'm just kind of curious whats maybe going into your thinking.
Mitch they.
As you know each each state not every state with each state has come out and and.
Issued a statement that stores must be close not every state but most.
I think at some point the government will.
Make the decision to allow us or as you heard last night.
The the president who wants to get back to business as quickly as possible, but the health and safety of our employees and our customers our communities really our primary concern. So we are going to stay close until April 2nd and then we'll continue to follow guidance from the local and federal officials whatever they say.
And as you know situations incredibly fluid.
And as soon as we know something we'll let you guys know.
And then maybe just the last one what can you say about leases.
What recourse do you have I know that Simon and some of the other landlords have shutdown centers I don't know if thats impacting you whatsoever, but.
Do you have any recourse of a center as close or if there's a co tenancy closets been violated I know April rents due soon or you guys kind of pay rat.
How are you how are you thinking about leases and is this going to end up in the hands of the lawyers as you kind of work through this or that you get some rent relief or how are you thinking about that side, if thats, obviously a big.
<unk> expense for you guys.
Mitch said deals directly with what the results would be for 2020 in how we operate within it and and we really can't give you any guidance on that at this point in time.
Okay fair enough thanks, guys.
Thank you.
Yes.
We'll take our next question from Sam Poser with Susquehanna.
Good afternoon, and thanks for taking my questions gentlemen.
So I'm going to ask you a few sort of what answer and then I've got some other things.
One if if you are if you are forced to if you decide to keep the stores closed longer than April 2nd which seems like.
It's going to be longer.
Have you thought about how you're going to compensate your employees.
And yourselves for that matter some companies have come out today, I'd say, they're reducing some C suite salaries for the year and so and so forth and that's it seems like using that to.
Help their people.
So can you give us some thought process on how you're thinking about that I mean, I don't know would have in Indiana, but I know like in Alabama, a week ago Monday the.
The cases in Alabama, 11, and now there is 280, so thats like that.
Oh goodness knows how big a an increase that is in a very short period of time so.
And I can do the math, but.
Just just how you're thinking about all that.
Yes, you know Sam as we've stated last week.
We will continue to payers store associates as schedule through April 2nd and as you know this is really a rapidly unfolding situation.
And we'll provide.
Any updates as appropriate on a go forward basis, but.
That's as far as I can go with that at this point.
Okay, all right and.
Your ecommerce business, you said I believe that the E commerce as a percent of total sales last year can can you give us a little more color on how that was sort of more recently, let's say in the fourth quarter and how that performed what's it when it gets stronger throughout the year.
Could you give us some color on that.
Forward looking.
Yes, Sam highest mark we've we've definitely seen significant increases in online traffic is especially well recently was announced store closures, but in the fourth quarter, we outperformed our expectations with very strong results during the peak holiday periods as I said.
Both through the Thanksgiving through cyber Monday, as well as during the quarter holiday season, we're very happy with the acceleration we saw.
And then over the last week of course, we've seen acceleration and it has been a triple digit accelerations as we close the stores.
I understand that but my question really was is it was 8% of total sales for the year did it right, let's say 10 or 12% in the fourth quarter was it ramping as a percent of total sales I'm even more.
Im just trying to get us feel freight for that.
That will help this sort of Sam historically, our fourth quarter E comp sales have been a strongest quarter of the year for us in this year was no different so you're you're you're right in line.
Okay, and then and then a couple of things just housekeeping.
What is sort of a normalized tax rate.
Without that.
Without that thing that happened last year, what would that will you know what I mean, if we're thinking I know into 2020 question, but I mean, if we're thinking about the normalized tax rate is like 23, 24%.
Well, we're not going to talk about 2020, but I would tell you that if you backed out the 1.9 billion our tax rate that actually occurred in 2019, our tax rate would have been about.
25.1%.
So.
I would say that somewhere between 24.5 and 25.
Would be a range that you could look at for the prior year on a normalized basis.
Okay, and then also you're you're you I know your share count your average share count was at.
14.3, but you bought back a much stock so.
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With this no guidance, but what's what is sort of the starting share count for the year could slow than 14.3 that was an average. So can you give us sort of way where there's the actual share count is that you won't be buyback from.
Yes.
So the outstanding shares you're asking at the ended the year.
Closer you're going to be about 14 too.
Thanks.
And then.
Given this given the situation and given sort of its the fluidity and questioning how long. This is all going to last.
Our vendors starting to give you are you getting dating on orders and are you getting back dating on orders that came in.
For the extended payment terms with with the.
With your vendor with your vendor partners.
You know Sam we've always had a policy that we don't talk about any.
Any negotiations with the vendors out I will tell you. This at the vendors have been incredible.
To us and.
It shows that tells me how important we are to them and how we present them in the past so the vendors of.
There is very cooperative.
Well, one vendor that remain nameless went out and send out a known apparently saying.
For orders that came in X to acts we're extending the dating by 60 days and if you write orders to be now on June thirtyth or something we're going to give you an additional 60 days dating and they sent that out in a general letter to people. So im not asking you for specific on what the what the extension is or or what companies are doing what but I mean.
Can we assume that.
You've you've got your payables stretch to be able to reflect the.
At the time closed because for the reason that you mentioned.
Dan a general sense here again, we hate to keep referring back. This bill we're not going to we're not going to reference anything about the cash flow, earning inventory positions of fiscal 2020.
Until we have better clarity on how the years going to play out.
The only thing I want to add to that Sam the only thing I'll add to that.
Incredibly proud.
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The relationship that shoe Carnival has been a build with the vendor community. So that as we navigate anything good or bad.
We know they have our back.
And thus far as I'm going to go with that.
Okay, and then and then lastly in and I.
And I just might have missed this if you didn't say it could you give us what your sales your same store sales by month work.
November December January you could give us into February and March if you want because current than we'd like to know that anyway.
Sam Directionally, we were slightly negative low single digit negative in November.
Because the shift to cyber Monday sales, we were up mid single digit in December and a high singles in January.
What was it that drove that high single digit increase in January.
Okay.
Well that.
We had a.
Varies.
Sales in women's shoes in January.
I believe it or not we drove it without boots boost for slightly negative in the month in January but our women's business was very strong our kids business was very strong.
And I was very happy with our our mens not non athletic product as well.
Thank you very much in the good luck with all this.
Stuff going on right now thank you Sam.
Well take our next question from Chris Svezia with Wedbush.
Hi, good afternoon, everyone hopping on late Chris.
I'll ask you about the weather.
Since you're not going to answer anything else. So how how's the weather should you guys.
Actually is a beautiful here in Evansville today.
All right knives.
Im kidding.
So actually I've got it got questions and carry this is waiting for you.
I'm just kidding, just in terms of defaulting to that statement.
Anyway in all seriousness.
So you commented about the comp momentum up until March 10th.
In any way you want to talk about it what what was driving that I know you just in reference to Sam's question, you're answering the women's business. The kids business fit athletic improved what else is going on in the business up into that point.
That you feel comfortable if you can comment or add some color about.
Well, we were we can we continued to see our women's business perform.
In the month of.
Early February.
Or through February tax refunds were actually out earlier this year. It I've really believe that than they were last year you remember there was.
We felt there was a delay in tax refunds last year into the March time period. So we think that they got out to do that because the customers in February coasts.
The business actually.
Accelerated as we got toward the end of February and then to the first.
Seven or eight days of March so it's.
That usually signals to the what we call, Texas here, but it.
But but we were so again women shoes, our kids shoe business was.
Very very strong during that time period, and we did see some acceleration and the aesthetic area. However, not as much acceleration there as we saw on the non athletic categories.
Okay and.
In the womens non boot category you referenced before.
Youre picking up market share I assume has been comments about paying us the competitive environment is that still on one thats still by the case in the reason why that that category was improving.
I do believe that.
That one of the results that product category is imprudent was calls we have less competition with payless being gone however.
I think is really important that I give credit to the merchant team, who reacted to that that back that payless was no longer around but by beefing up our women's dress shoe area and our women's casual area. So the customers.
That had been buying that product from payless.
No that they could get it from shoe Carnival.
Okay got it on I want to go to.
Stores and store openings after April 2nd.
I know you mentioned that you're sort of watching what the CDCF insane and the government would you do anything local by local market, depending on what those local agencies states are indicating as to whether or not you can open up stores.
Or would you just think nationally yes, yes also as a close also cause or would you go state by state depending on what's going on I'm, just curious how youre thinking about that flexibility when you step into plus plus staples.
I will tell you that is states.
Or local communities.
Good to go ahead the open retail.
Our stores will be open.
Okay that might be the only forward looking statement I'm going to give but.
And moving we are ready willing and able to open our stores when they were given the go ahead.
But any government agency, Chris Paramount first first is going to be the health and safety of our employees and our customers and we perceive it to be safe as best we can look at it on a on a regional basis, if theres different levels of safety across the country.
Got it okay. That's helpful.
E Commerce, just so I understand something 8% of sale one of the margin dynamics look like now on that segment of business today comparable to the corporate average today, Bob just where whereas that stand right now.
Hi, Chris we're very pleased to say, they're still comfortable with where the profitability was.
Throughout the fiscal year and comparable when you get the bottom line profitability with the rest of our business roughly.
Okay. Thank you Mark it's fair to say that if in fact, you are doing at Ics seen acceleration triple digit increases at that and proven leveragability and profitability of that segment as you go through this period.
We believe that have the ability to as we move towards our mid term objectives to grow from yes below 8% last year, so above 10% of company revenue.
We'll continue to get some leverage and we believe we'll be able to translate that into a higher profitability through those transactions.
Got it as Shimon.
Cliff you mentioned, you're looking at expenses are looking at Capex.
I guess what are you looking at where I now carry corrugator Capex number if that's okay. I guess, what 2020 guidance can you tell but just curious where you're looking mess you may expense savings.
And color about that provide and capex.
Chris like we said at the beginning of the call, we're not going to be over fried any.
Guidance on 2020 on how we're operating within this environment, how we're looking at S. DNA.
We won't be able to asked that question.
Yes.
Okay.
Last thing I guess I got it.
You referenced 57 million in cash ads.
I want to item I would the exact date instead of 59 on a on the revolver you haven't bought anything on the revolver at this point correct.
We had not drawn any on anything on the revolver at ended the year and we were not able.
Upgrade update you on that I guess, we gave you.
A number of cash on hand at the end of our fiscal February at that point of time, we could stay we didnt have any borrowings on deck as we head.
Significant cash obviously on hand at that point in time.
Okay got it.
Okay, that's all I got.
All the best you guys appreciate it.
Thank you Chris you Chris.
Yes.
And we'll take our next question from Mitch Kummetz with pivotal research.
Thanks.
Got a few more so on the digital I Hope. This is fair game because you guys said in your prepared remarks, the digital is up triple digits of weight I'm. Just curious do you think that's a natural migration is the stores are close or is that a function of certain strategies that you guys have employed and then in addition to that actually I guess, along the same lines how.
How are you know leveraging those 23 million shoe perks members in order to encourage traffic and conversion can you maybe speak to some of the strategies and how you think those will work.
Sure Hi, Smart if both it's there is a natural consumer shift now that our store base was closed.
But we're also shifting our marketing investments to accelerate a new traffic and new ways to come into our online channel. It is really the CRM program and the knowledge that we have gained about our 23 million plus members. So we're able to tap into that and moments like these times.
And try to leverage and.
Ways with high profitability at high effectiveness, we've seen over this first seven days in this volatile marketplace. We're really pleased with responses and like I said, we're seeing a triple digit increase in orders and we're seeing an acceleration.
And as we learn more and more through our rich analytics, we're continuing to invest to bring more and more of those consumers into our best So we're really pleased with.
How our teams are responding how they are rapidly.
Getting new vehicles out there to centers and how we're able to still satisfy some of the demand in the marketplace Burmese unprecedented.
And then you also mentioned that you guys are fulfilling from stores where.
Where you're able to do that can you maybe just sort of walk through a you know the strategy behind that is the reason that you're doing that so they're just going out of a DC and is there a certain number of stores within certain regionals reaches that you've kept opened with with with some people on staff in order to do those.
Sure our ongoing E comm fulfillment strategy has been to utilize our store base as we still believe that's the most effective way to have our inventory ready to be purchased in our franchise. Another two stars or fulfilled.
To the situation as close as those respective stores well from a supply chain effectiveness at a cost efficiency. So in this moment, where government officials are allowing us to we're continuing to use our stores.
To fulfill E commerce orders.
In addition, we're using our DC so that we've got dual capabilities to fulfill both.
From a distribution center as more stores and closed as wells from around the country, where governors are allowing us to or local officials.
Okay, and just if I might ask on yes, I can add to that.
A lot of the states the governors have come out and said that the stores have to be closed however.
Filament and Thats, a key word fulfillment can still take place.
As long as you're recognizing the six foot.
Separation got it.
And then a follow up I wanted to ask questions. He was asking about you commerce percentage you guys. There was 8% for the year I get it that is higher in Q4 because of the holiday, but can you say what it is in order was in Q1 last year I assume it was under the 8%.
But we're not we're not currently breaking out our E. Commerce results. So that is the first for us to share our aggregate numbers, but again really delighted that got us to climb over 8% and we see or a runway. Despite what's currently going on our strategic plan, how does get north of 10% in the next one to two years.
Despite the acceleration, we're going to naturally get right now.
Okay I got couple more one is there any way you guys could characterize what percent of your Q1 inventory of seasonal I know it's bigger in Q2, then Q1, but I was just now.
And whether its can you just call sandal seasonal if there's other things that you consider to be seasonal.
You know midstream second address anything related to or inventory positions that we currently have.
Okay.
And then last one maybe for you carry.
I know that you know a rat and store payroll or to your bigger.
SGN a line items can you maybe maybe address some of the other ones.
Like T any or marketing are there other line items on the SGN, a side and just sort of frame them and.
Are they you know its marketing or a few hundred basis points as percent of sales as Danny honor, but you know in any just give us some sensors to.
Because those are some of the line items that you would maybe have the most.
Flexibility to trim.
But we're not going to likes that were negative in the 2020 guidance and even the historical numbers, we win it get into that level of detail.
Hi, printer business like that so im not going to be able to address that question directly.
Can you say with marketing is I don't know I don't have you given marketing before but that's kind of a number that a lot of people do give.
Typically is disclosed in our K, we run approximately around 4% or sales some years.
No hire some years little bit lower but generally it's around 4%.
Okay, Great appreciate that thanks, guys. Good luck.
Thank you. Thank you.
Did you have a follow up question from Sam Poser.
Hi, Thank you. Thank you I'm going to sort of pile on with Mitch.
Oh, the I understand that you're very pleased with your ecommerce business and how it's going however, and normally you don't talk about a lot of things and you're not giving us guidance Weve. This these are extraordinary times, so that being said we recognize your E. Commerce business is really good and growing but as a percentage of sales in Q1 two.
Thousand 90, what was the E commerce as a percent of sales. So we have a framework.
So we cannot put out totally ridiculous numbers with our.
One Q estimates that we will do.
Thank you.
The same when you're going to give an exact number if we were 8% for the full year and we.
We have a higher percent Q4, so Q1 was under the average so you'd see that Q1, two and three were under the average as a percent in Q4 be over the average it as a percent.
Now my desk irregular over how how much was Q4 over I mean, what's it over it had to be overall a lot I mean was the like 12 and then everything else was was was was that six or seven is that directionally correct.
We aren't going to break down is the specifics at this time.
Yeah, I'll just have to leave at that but we do have.
Cyber Monday and holiday sales.
Ecommerce is very strong in the fourth quarter as though it that's what drives it through that as a higher percentage of the overall.
You see Q1, two and three via.
More consistent percent of the total.
So I think Mitch and I would arguably stable source its taking care of so.
Thank you and.
Got a success throughout all this.
Situation.
Thank you said.
And at this time I'm showing no further questions I'll now turn it back to our presenters for closing remarks.
I want to thank you for participating our conference call and your continued interest in shoe Carnival.
We do look forward to talking to you again in May as we report our first quarter results.
Ladies and gentlemen, this concludes today's call. Thank you for your participation and you may now disconnect your phone line.
Hi.
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