Q4 2021 Boot Barn Holdings Inc Earnings Call
Good day, everyone and welcome to the boot Barn holdings fourth quarter of fiscal year 2021 earnings conference call at.
The remainder of this call is being recorded and is now my pleasure to turn the conference over to your host Mr. Jim Watkins Senior Vice President of Finance and Investor Relations. Please go ahead Sir.
Thank you good.
Good afternoon, everyone and thank you for joining us today to discuss the boot barn fourth quarter and fiscal 2020. One earnings results with me on today's call are Jim Conroy, President and Chief Executive Officer, and Greg Hackman, Chief operating Officer, and Chief Financial Officer.
A copy of today's press release is available on the Investor Relations section of boot barns website at boot barn Dot com.
Shortly after we end this call a recording of the call will be available on the replay for 30 days on the Investor Relations section of the company's website.
I would like to remind you that certain statements we will make in this presentation and our forward looking statements. These forward looking statements reflect boot barns judgment and analysis only as of today and actual results may differ materially from current expectations based on the number of factors affecting the firm's business.
Accordingly, you should not.
Undue reliance on the forward looking statements for a more thorough discussion of the risks and uncertainties associated with the forward looking statements to be made during this conference call and webcast. We refer you to the disclaimer regarding forward looking statements that is included in our fourth quarter fiscal 2020, one earnings release as well as our filings with the SEC referenced and that disclaimer.
And we do not undertake any obligation to update or alter any forward looking statements, whether as a result of new information future events or otherwise.
I'll now turn the call over to Jim Conroy Boot barns, President and Chief Executive Officer, Jim.
Thank you Jim and good afternoon. Thank you everyone for joining us.
On today's call I'll review, our fourth quarter and fiscal 2020 one results highly.
The highlight each of our key strategic initiatives and provide an update on current business.
I'll end my remarks, Greg will review, our financial performance in more detail and then we will open the call up for questions.
Looking at our recent results the fourth quarter was extremely strong with consolidated same store sales growth of 26, 9% driven by a combination of the underlying strength and the business and external factors, including a boost from the recent government stimulus as well as an easy comparison to the end of March last year.
Same store sales and our physical stores were very strong increasing 28, 5% with growth driven primarily by and increasing transactions.
The momentum of our ecommerce business experienced since the start of fiscal 2021 has continued with sales increasing 19, 5%.
Over the same period last year, with even more pronounced growth and profitability.
Merchandise margins were also very strong increasing 300 basis points year over year, driven primarily by better full price selling.
Another component of the improvement in merchandise margin was a 120 basis point benefit from lower shrink.
And I'm pleased with the ability to drive profitable sales and maintain our full price selling philosophy across both channels.
The acceleration and sales and strength and merchandize margin resulted in fourth quarter earnings per diluted share of 82 cents compared to 20 and the prior year.
And adjusting for the tax benefit in both years, we grew earnings per diluted share more than 300 per cent to 75 cents compared to 18 cents and the prior year period.
Moving to the full year the.
Spike at the impact from COVID-19, and subsequent macroeconomic headwinds we were able to achieve very strong results.
All of the same store sales grew three 1% led by E. Commerce growth of 23, 6%, partially offset by a one 1% decline and retail stores.
For our store comps to be down and only 1% for the year after such a slow start due to COVID-19, it's truly remarkable and shows how strongly the business has rebounded.
Our ecommerce business exhibited very strong sales growth during the year and we made significant progress improving the omni channel experience for our customers.
Our continued focus on full price selling and commitment to profitability.
Drove consolidated operating profit growth of 100 basis points during fiscal 2021.
And 297% up for.
Eight, 7% and fiscal 2020.
When adjusting for the tax benefits recognized in both periods earnings per diluted share grew 23% to a dollar and 92 compared to $1 56 and the prior year.
We are extremely pleased with the earnings power of demonstrated by the business given the myriad of challenges over the last year.
I will now provide and update on each of our four strategic initiatives beginning with driving same store sales growth.
During the fourth quarter, we saw at very healthy sales of quite both our stores and ecommerce business.
As discussed on our last earnings call sales started off strong and January with outsized same store sales growth of 17% helped by stimulus payments received at the start of the calendar year.
While February business was also positive both in stores and online and we did see a sequential deceleration compared to January as a result of headwinds, including a lack of radios and events delayed tax refunds and severe weather across much of the country.
With the release of additional stimulus funds and the month of March business Reaccelerate at with outsized growth and bolt channels, especially in comparison to March of 2020 when sales declined sharply due to the original onset of COVID-19.
From a geographic perspective, we saw solid growth across all three regions of our stores business and the west remains strong showing sequential improvement over the prior quarter.
Notably the fourth region, and sorry, notably the North region showed the most of that sequential improvement from roughly flat in the third quarter to growth similar to the west region and the fourth quarter.
The South region, which includes Texas posted strong growth and the fourth quarter rebounding nicely after comping negatively and the third quarter.
From a merchandise perspective, we saw broad based growth across all major merchandise categories, with particular strength and work boots, and men's and ladies' western apparel and western boots.
Consistent with the third quarter work boots again performed extremely well.
The strength in men's and ladies' Western apparel was driven by solid growth and denim and the knit tops.
Our work apparel business Comped positively during the fourth quarter. Despite continued pressure on F. Our work apparel, which declined mid single digits year over year, which was a sequential improvement from the third quarter.
We believe the broad based growth across merchandise categories at a testament to the strength of the underlying business reps.
It represents a desire of our customers to refresh their wardrobe and has been influenced by our customers' receipt of stimulus payments.
Yeah.
From a marketing perspective, we continue to focus on each of our core customer segments through a comprehensive media mix by segment that includes radio and TV direct mail and digital.
We use a combination of customize marketing messages and tailored merchandising strategies to address each of our customer segments.
During our third quarter call, we discussed our increased focus and attention on the newly created just the country segment as part of this initiative, we have augmented our assortment and hiking boots outerwear casual footwear and apparel.
We believe that this work coupled with advantageous consumer trends towards being outdoors and dressing more casually has enabled us to further increase sales and capture a broader group of customers.
From an operational perspective, our field leadership team once again rose to the challenge of the ongoing acceleration and sales volume.
I must call out our regional directors and our district managers, who pivoted quickly from the challenge of keeping stores open and operating at the onset of the pandemic.
And then and hiring sales associates aggressively and ensuring that every store has a solid management team in place to meet the outsides of consumer demand and the business today.
During an incredibly tumultuous year. This team managed to grow total annual sales and maintain a high level of customer service and keep voluntary store manager turnover below 15%.
It is quite a feat and retail today and even more of an accomplishment during the COVID-19 impacted year at.
It would be remiss not to express my gratitude for this group for the leadership and strength and they have shown over the past year.
Similarly, our ecommerce team and each of our two distribution centers have been able to keep pace with the surge and demand in fact in order to further support the outsized business. We are experiencing we reduce the reliance on our vendor supply chain and.
Accordingly, we are servicing more of our ecommerce orders directly from our fulfillment center, rather than relying on vendors to drop ship orders.
Additionally, we took action early on and the fiscal year by deciding to temporarily warehouse and some non fashion replenishment goods to ensure that we have more control over the replenishment process to the stores, allowing us to react quickly to customers' product needs.
And I must commend the entire merchandising and supply chain organization for working tirelessly to fuel the spiking business minimize out of stocks and enable us to continue to build market share.
Moving to our second initiative strengthening our omni channel leadership.
During the fourth quarter, we saw very strong sales and our ecommerce business with same store sales, increasing 19, 5% as we've discussed for some time, increasing the profitability of this channel has been a major focus and therefore, we were very pleased to see EBIT growth more than double during the fourth quarter.
Once again boot barn, dotcom sales outperformed the balance of our ecommerce business with topline growth of over 40% in the quarter.
Sales of chapters dotcom declined when compared to the prior year as a result of the new pricing structure completed in July of last year.
Several omni channel initiatives, we've implemented over the past two years, including buy online pickup and store buy online and curbside pickup.
And store fulfillment.
Same day delivery.
And buy online return and store continue to be very well received by our customers.
We continue to develop faster and more effective ways to deliver ecommerce orders to our customers further enhancing customer service and.
And at mitigating freight costs.
Additionally, we are using many of these new capabilities to drive increased traffic to the stores, which is helping us to both drive incremental store sales as well as grow the percent of our customers that shop across both channels.
This should should serve us well going forward as it further drives customer loyalty and strengthens our competitive position against pure E Commerce players.
As we looked at fiscal 2020, two and our focus will remain on augmenting our omni channel service offerings, while continuing to build the profitability of that channel.
Now to our third strategic initiative exclusive brands.
During the fourth quarter exclusive brand penetration reached 24, 2% and increase of approximately 10 basis points compared to the prior year period, despite facing product constraints due to supply chain disruptions.
Our fiscal 2021 exclusive brand penetration grew approximately 170 basis points over the prior year to 23, 7%.
We are very pleased with our penetration growth during the year given the challenges we have faced as the result of COVID-19.
The high quality and nature of our exclusive product is further evidenced by their representation as top selling brands and our stores.
Cody James Cheyenne idle wind and Hawks, where each and our top 10 selling brands and the store during the fourth quarter.
As we looked at fiscal 2020, two we have already seen nice improvement and the supply chain. As a result, we expect exclusive brand penetration to grow approximately 250 basis points and our first fiscal quarter as well as our fiscal year.
Finally, our fourth initiative and expanding our store base.
During the fourth quarter, we opened eight new stores and closed one store, bringing our total store count to 273 stores across 36 states.
For the full fiscal year, we opened 15 new stores as planned.
We are pleased with our new store performance during fiscal 2021, given the difficult environment and uncertainty with how new stores would perform during the pandemic.
Our new stores opened this past year have exceeded our sales plans.
And are expected to pay back within our targeted three year period for better.
We continue to be emboldened by the white space opportunity, we have across the country to continue building our store base, we have a solid pipeline set up for fiscal 2020, two and expect to deliver 10% new unit growth in the coming year.
That said given the impact of COVID-19, we did not reaccelerate, our new unit growth plan until the last six months of fiscal 2020. One as a result, we expect new store openings to be back half loaded and fiscal 2020 two our.
Our current plan is to open approximately three stores and the first quarter and seven stores and each of the second and third quarters with the balance to be opened and our fourth fiscal quarter.
I'd now like to provide and update on current business.
Our first quarter is off to a tremendous start with both our stores and digital channels continuing to produce very strong results.
Given the impact of COVID-19 on our early fiscal 'twenty 'twenty. One results. We believe that the comparison of current business for the same period two years ago provides the most helpful view into our results relative to a more normalized environment.
When compared to the same period two years ago total sales and the first week.
Six weeks of our first quarter increased approximately 67% from.
From $87 million in fiscal 2020.
The approximately $145 million at.
This also represents a sequential acceleration when comparing total sales growth in Q4 of fiscal 2021 to the same period two years ago.
Not only has the business been extremely from but the week to week sales volume has been relatively consistent for the entire six week period. We are very pleased with the underlying strength of the business and solid execution of the team and believe that our growth is outpacing the underlying growth and the industry.
That said, we do attribute and attribute a portion of the strength of the business to our customers' receipt of stimulus payments.
Pent up demand and an overall and more favorable macro environment.
I'd like to now turn the call over to Greg Hackman.
Thank you Jim good afternoon, everyone.
And the fourth quarter net sales increased 37, 2% to $259 million.
The increase and net sales was primarily a result of the $26 90 per cent increase and same store sales.
The sales contribution from temporarily closed stores that were excluded from the comp base.
And the incremental sales from new stores opened over the past 12 months.
Of course profit increased 59, 4% to $92 $4 million or <unk> 35, 7% of sales compare the gross profit of $58 million or <unk> 37 per cent of sales in the prior year period.
The 500 basis point increase in gross profit rate resulted from a 300 point increase and merchandise margin rate and 200 basis points of leverage and buying and occupancy costs.
Merchandise margin increased 300 basis points, primarily as a result of better full price selling and a 120 basis point benefit from lower shrink.
Operating expenses for the quarter was $59 $5 million or 23 per cent of sales compared to $48 $3 million or 25, six per cent of sales and the prior year period.
Operating expense increased primarily as a result of additional costs to support higher sales and increased incentive based compensation.
Operating expense as a percentage of sales decreased by 260 basis points, primarily as a result of expense leverage on higher sales.
Income from operations was $32 $9 million or 12, 7% of sales and the quarter compared to $97 million or five 1% of sales and the prior year period.
Income tax expense was $6 $3 million and the quarter compare the $900000 and the prior year period, resulting in an effective income tax rate of 23% and the fourth quarter.
Net income was $24 $6 million or <unk> 82 cents per diluted share compared to net income of $5 $7 million or 20 cents per diluted share in the prior year period.
Excluding the tax benefit in both periods net income per diluted share and the current period was 75 cents compared the 18th and the prior year period.
Turning to the balance sheet inventory decreased approximately eight seven per se on a comp store basis compared to last year.
On a consolidated basis inventory decreased four 5% to $276 million.
This part of this decrease was primarily driven by the reduction and comp store inventory, partially offset by an increase of inventory for the new stores added in the last 12 months.
As of March 27, 2021, we had a total of $111 $5 million of debt outstanding related to our term loan and zero drawn on our 165 million dollar of line of credit we.
And we had $73 million and cash on hand at the end of the quarter and our net debt leverage ratio at the end of the quarter was zero point for.
Subsequent to year end, we made a 41 5 million dollar of voluntary prepayment on our term loan reducing the outstanding balance to $70 million.
Okay.
While we are pleased with the underlying strength of the business. It is very difficult to parse out the impact and duration of government stimulus pent up demand and macroeconomic tailwind on the business.
Given the circumstances of the company is the only providing select full year of fiscal 'twenty 'twenty two guidance at this time.
In addition to new unit growth of 10% and exclusive brand penetration growth of approximately 250 basis points. The company also expects capital expenditures to be in the range of $33 million to $36 million and the effective tax rate for the year to be 26 per cent.
Now I'd like to turn the call back to Jim for some closing remarks.
Thanks, Greg.
For fiscal 2021 proved to be a challenging year I am proud of the resiliency of this organization and the overall strength of the boot barn model, we have proven our ability to navigate as a company through difficult times and I believe we will continue to fortify our leadership position and the western and work industry.
I'm looking forward to fiscal 2020, two and the opportunities we have to continue to build the business.
Now I would like to open the call to take your questions.
Kevin.
Thank you we will now be conducting the question and answer session.
I'd like to ask a question. Please press star one on your telephone keypad of confirmation tone will indicate your line is and the question queue.
The press Star two if he would like to remove your question from the queue for participants using speaker equipment and it may be necessary to pick up your handset before pressing the star keys, one moment, please while we poll for questions.
Our first question comes from the line of Matthew Boss with J P. Morgan. Please proceed with your question.
Great and congrats on congrats on a really great quarter, and even more so on and the momentum.
Thanks for that.
So Jim and maybe on the on the 67% quarter to date comp relative to the.
Fiscal of 'twenty.
And I think even more importantly at the consistency that you mentioned, particularly in may for the back half of that comp period.
What do you attribute to the magnitude of date Youre seeing and just at any way to parse out the micro drivers of continued category.
The category opportunity that Youre excited about where the market share opportunity that you see going forward and the and the western landscape, which I know is it's fragmented.
Sure Good question.
We will absolutely start with attributing a healthy dose of our current business to macro and.
Yeah that the stimulus checks that came out at the end of March we saw an immediate pickup in business.
And I will say that the business has remained very strong for longer than it has in the past coming off of a stimulus. So you'll review that of course is very positive.
And.
I think one of the things. We're experiencing is you know people are now finally, feeling more free to.
Get out and go outside go out for dinner et cetera, and we're seeing at across the merchandise categories. So while we were continuing to get some sales growth in the last couple of quarters.
More of it was need states and now it's really much more discretionary categories. So it's men's and ladies' apparel, it's western boot and seen a decent business and our exotic skin and cowboy boots and.
And we've seen sort of a pivot from purely functional too.
Discretionary and more at once based business.
And to try to give you real specifics and.
And at the 67 per cent.
First of all of that is a total sales growth.
For two years ago.
So there are some sales and the are attributed to the.
Additional store count that might be 10, or 12 per cent of the 67 per cent.
So then the balance is well how do you parse up the remaining 55 per cent yeah, I would say that we were coming in with the sales trend of several quarters prior to COVID-19 at that were.
It was right around plus 10, and and maybe we're executing a bit better than that but the balance of it is going to be macro it's going to be pent up demand.
And.
As we look forward the.
All of that said and attributing a fair amount of the current business to macro.
They're still wind in ourselves of.
And one times of unintended going forward I suppose because.
We're still operating and environment, where many rodeos and concerts arent going forward, but they're finally starting to come on sporadically.
So over the next 12 months, we'll start to see.
Big events rodeos concerts that warrant and the L y period.
Come back online.
The second macro thing that.
Might give us additional sales going forward.
And the recovery and the oil patch.
And we called out at far work apparel for a reason, it's still negative but less negative the price of a barrel of oil is between 60 and 70 today and.
And we believe that part of the economy will start to show some more growth.
So while some of these macro factors may dissipate over time, we'd like to think that there are some other things that will help us continue of very strong sales growth, perhaps maybe not 67% over two years, but still a pretty strong growth over the next couple of quarters.
Hopefully that gave you some color on and sort of how we're feeling about the business.
Yeah, that's that's great color and and then maybe if we broke it apart one level deeper and on brick and mortar. So just given the strength that youre seeing at stores and then tying to the acceleration and unit growth that you cited for the back half of the year.
Is there any feeling for annual unit growth relative to the 10 per cent, but you've historically pegged the model at as we look forward and just any metrics and maybe you could share on some of the new market builds the give you confidence and longer term accelerating the.
The unit growth opportunity here.
Absolutely we feel very good about our new store development, we are of a full pipeline and albeit that many of the stores will open in the latter half or and even in the fourth quarter of this fiscal year.
The positive signs that we're seeing are our multiple to be honest we've seen.
Very strong openings for brand new stores, and essentially brand new markets.
It may not have the same brand strength and.
And the boot barn brand strength that we would see in some of our more mature markets like California and Texas.
So that gives us confidence that as we get into.
Parts of the country that May night.
Traditionally seem to be fertile ground for a western and retailer those stores are doing quite well and they're doing quite well selling western.
Merchandise as well as work merchandise, but the split of business and it's very similar to the rest of the country. So.
And very strong positive signs from the northeast markets for the initial group of stores. There. The second piece I would say is as we are filling in some of our mature markets.
Most notably, California, and Texas.
The level of cannibalization that we're seeing from the surrounding stores and it's been very minor.
And admittedly, it's being completely masked and today's business by extremely outsized sales growth, but even prior to the the acceleration as we were filling and the more mature markets.
And the pull from local markets was was pretty minor.
And then perhaps the third piece of it is the to be able to open up new stores during the pandemic when people.
Aren't necessarily.
The buying footwear and apparel.
And particularly in new markets and to have the stores open.
And project them to be coming in at better than a three year payback and it's just.
Very very confidence inspiring for our new store.
The pipeline so as we look for the next fiscal year.
And I'd like to think that we would probably accelerate a bit beyond the 10% new unit growth.
That's great color best of luck guys.
Thank you.
Thank you. Our next question comes from the line of Max Rock length of <unk> with Cowen and company. Please proceed with your question.
Great. Thanks, a lot and congrats on a very nice quarter saw Greg any color on a framework of how youre thinking about gross margin and SG&A for <unk> and then just maybe more broadly there are many inflationary pressures across the industry. So how are you thinking about offsetting those whether it's transportation and labor or any other headwinds.
And.
Sure Max Great questions.
You know in terms of.
And we aren't giving specific guidance of course, but in terms of of gross margin rate. We've continued to see over the past several quarters really nice improvement and full price selling some of that's been benefited by exclusive brand growth and part of that has been just being a bit less promotional whether it's depth of discounting or.
Duration of the event and so.
I would expect that that will continue to to expand merchandise margins somewhat.
With the help of exclusive brands.
So I think that trend will continue obviously, the 120 basis point increase and shrink was what's one time for Q4, I mean, the spread that out of over four quarters. If you will to to more normalize at.
And so benefited I think and shrank from having really great customer service I think all of our Jim talked to this our stores. Our field group was really focused on managing that that customer connection and I think that helped us with reducing the external shrink component.
You did touch on another piece of gross margin, that's the probably a headwind and that is freight expense rate. We expect to see increased inbound freight expense, we saw a little bit of that in Q4, having said that we were able to mitigate that expense by some of the the things at the ecommerce team is doing.
In terms of shipping encouraging of customers to pick up the product at the store.
And where we can consolidate of shipment and reduce our freight costs. So we'll have good news on the on the merchandise margin expansion and we'll probably have some headwind from freight net I think book will grow our gross margin rates in terms of SG&A and some of the pressure there we have seen increased labor costs over the last couple.
All of Yours I expect it will continue to do that again at the field has done a nice job of building of basket and and that helps us alleviate some of that wage rate pressure and and kind of keeps the labor rate component and check and and we saw some nice leverage in.
Q4 with with the outsized sales growth those are the main things and then finally in terms of of you know.
Perhaps vendor pricing increases I think we will see some of that we've heard that from some vendors that they're going to pass along some price or price cost increases, whether it's cotton or perhaps the the resident on the on the performance of a beat or whatever.
And we would expect the pass that along to the customer we're not uniquely disadvantaged here right and so I think we'll be able to again manage our margin rate.
At the level and we've done in the past even with those price increases.
Got it that's very helpful. And then and can you provide some more color on things that you're doing proactively to drive strong private brand growth and then on just country. How have you seen that category evolve over time and do you think that there could be of new private brand on the horizon and and then just last you've historically spoke.
And 210 point higher on merchandise margins versus national brands is that still the case and as you gain the economies of scale are there opportunities to maybe increase that by several points over time, thanks, a lot and good luck.
So the the E b growth and there's a couple of things what's happening in the in the current.
Weeks, and and and this quarter is.
Our supply chain has started flowing again and and we are certainly chasing some businesses here and there, but the big difference between the fourth quarter and the first quarter is the exclusive brand team the supply chain team has gotten us back in stock.
And it has done that despite the fact that the overall business had grown in such an outsized manner.
I think that coupled with the fact that you know we.
The stores team.
As educated on our exclusive brands they understand the features and functions and.
And they tend to wear the product and the store et cetera et cetera. So when you put all of those things together, we really are seeing some very nice momentum and exclusive brands that has continued now for for several years.
Jeff's country as a customer segment is.
It is really helping us to continue to drive more sales in general will come back to exclusive brands and one second.
And we launched that initiative the timeliness of it was somewhat coincidental, but very very fortuitous as just as people were going out and hiking and more and being outside more and more and more casual clothing. We were launching an initiative that fits that perfectly. So we've seen some really nice early reads on hiking boots.
On the knit tops, both men's and ladies.
Baseball caps and.
And all for that customer and that is maybe one concentric circle right outside a western <unk>.
Customer of core western customer.
Your your question is spot on and you might surmise that as we look at our portfolio of brands and we have a western customer and at western of exclusive brand for two one is men's and women's and when it's ladies.
And then we've of where customer and we have of work exclusive brand. We are in their early stages of developing new exclusive brands that would be targeting the more country customer I would not build anything into this year and while the product might hit the stores and the fall or into the fourth quarter.
<unk>.
And we're really looking at that product being and even more meaningful part of the assortment.
In the and our next fiscal year.
And in terms of your last part of your question was around what's the margin expansion opportunity and exclusive brands versus our vendors.
We are absolutely getting more efficient and we're getting better economies of scale, when we buy and source of our exclusive brands, but we're also very keen on developing the best product in the industry and we want to make sure that.
Yeah, if we can get two points more of markup, we might put it right back into the make of the product or maybe split it and and make at 11% and put a bit back into the make the product because we want the brands to be able to stand on their own against our other third party branded partners and let.
The customer decide you know what.
And what they want to buy.
And Ironically, one of the things that May happen is as our third party branded vendors.
Begin to change their pricing to us it actually might make them a little bit less competitive to the consumer so.
While they need to run their business and they've been tremendous partners to us and building hours.
May actually wind up with and opportunity to grow and exclusive brands, even more because we're one of the increasing the prices of our third party brands.
And but for the time being I would model that 10 points of margin expansion.
Yeah.
Got it thanks, a lot you and that's very helpful.
Youre welcome.
Thank you. Our next question for comes from the line of Jonathan Komp with Baird. Please proceed with your question.
Yeah, Hi, Thank you very much.
Jim I wanted to just follow up to the maybe clarify how you're thinking about the business it seemed like.
Maybe you're signaling and looking at our sales on a on a two year basis and really using maybe at the trend before.
At the most recent.
Period that you've seen.
Sort of yes, 20 per cent or so growth on the two year basis, maybe as a as a floor and going forward and so I wanted to just clarify if that's how you're thinking of things and then also when and when you look for and what are the one of the events that youre looking for into whether it's here of late July our heart and the <unk>.
Some of our in terms of some of the social events coming back at that can be meaningful.
Sure so on the on the first piece.
Right and if you think about 10% new stores and if we can just ex out. The fact that they are coming later in the year, but that would give us not quite 10% new sales growth rate, you know stores or only a portion of total sales and our new store doesn't always offer doesn't always open at the average volume of eight stores.
10% of new stores doesn't give us completely 10 per cent new sales growth and our same store sales of our underlying same store sales, which.
And of course, and so the question I think everybody is trying to understand as are we at.
We have been able to post plus 10 and comps in store and better than that on line.
And our online business, maybe and get stronger once we cycle of the shufflers dotcom pricing on July of last year. So our underlying income can be quite strong as we get through them.
Yeah.
Yeah, the the macro impact of of some of the things. We're facing right now are the tailwind at where we're benefiting from in terms of events there.
There is and a number of them.
And.
I'll give you two or three real examples of the first is one of the larger radios. The it's not a massive sales driver of like Houston, and our Fort worth at one of the larger radios in the country every year and Cheyenne frontier of days that happened in July and it's going forward.
And notably that's and outdoor rodeo and at an indoor rodeo, so, but it certainly seems to be a step and the right direction.
Many of the country music artists, including our partner Brad Paisley has posted his concert schedule and he is going to be very active.
Over the next several months almost entirely outdoor amphitheater kind of concerts.
But both he and Miranda are starting to play and I think of lot of the country music artist will.
And be much more active and the certainly were on the last 12 months.
In December is the finals of the rodeo season, it's in Las Vegas at drives growth everywhere and a lot of growth in December.
And so that will be you know potentially.
More opportunity to grow the business.
And then perhaps this is too forward looking but as we cycle and to the spring of next year. This is where some of the the real large events. We expect will come back so of the Fort worth of stock show the Houston Rodeo.
And where it is three weeks long and at and the entire rodeo season, and Texas, just as the massive impact on sales.
And then we'll get back to cycling festivals in the spring that didn't go forward. This year like stage coach or CMA Fest, and Nashville, and hope for those businesses will come back online so.
The there's reason to believe that there is some optimism and looking forward.
Again admittedly business right. Now is also having is also benefiting tremendously from some sort of macro factors.
Excellent and very helpful and maybe a follow up for Greg when I look at gross margin and the last two quarters of above 35 per cent and overall EBIT margin.
About 13% combined and the most recent quarters.
Anything and the mix there or the components of the business that that's not sustainable from a margin perspective, especially on <unk>.
Given some of the commentary about about growing the exclusive of penetration and continue to grow ecommerce profitability, just how should we think about using.
Using the last two quarters as the baseline from a margin perspective.
I think if you look at the merchandise margin, Jon and I think that debt.
We believe that that expansion the the.
The improved full price selling et cetera can continue maybe not at at the pace at ran and the last two quarters, but but being able to grow at beyond the 25 basis points that we typically call out as it relates to the exclusive brand penetration.
We have seen a benefit and leverage both and the buying and occupancy line at that sits within the gross profit and also in SG&A, we've seen leverage and marketing expense for example, where we werent able to we wouldn't have been able to spend up to the Q4 levels and frankly, if you look at the Q1.
Quarter to date growth over the two year period, you know that's hard to spend at our typical 3% rate at so.
I don't think we will get the same leverage out of buying and occupancy and SG&A that we've seen the last two quarters.
But we manage payroll pretty effectively we've tried to fill open jobs I would tell you that we've got at tool that helps us flex up labor that we haven't been able to hit those targets exactly part of that is you know trying to hire more and more people to meet the demand.
So long story short I think some of the leverage will stick with us and some of it will be transitory again, the the marketing, we really do want to earmark call at 3% of sales.
As of spend and in Q4 and Q1, we didn't.
And Q4, we didn't do that and in Q1 and I don't think we'll be able to spend to the growth we've seen.
But again labor and corporate overhead those things as we're able to growth sales and an outsized way and we'll get leverage.
Okay very helpful. Thank you.
Thank you.
Thank you. Our next question comes from the line of Janine Stichter with Jefferies. Please proceed with your question.
Hi, everyone and congrats on the incredible momentum.
And I wanted to ask a bit about the inventory I think you mentioned you're doing more of your own for film at burst and I think you typically do a lot of drop ship, maybe just talk a little bit more about that are there any margin implications of anything we should think through in terms of of the impact at the balance sheet and then secondly, and this just curious about the schaeffler and rebranding I think that was a quarter of our tioga.
Just curious where that stands and at that still a headwind E comm considering that the growth you've already seen.
Okay and on the first piece on inventory there, there's really two pieces.
As to what we did differently and our supply chain. The first was.
Because we have a fair amount of product that is.
Low on low fashion quotient of high replenishment we.
Sort of pre bought some of that and brought it into our distribution center, which as you well know Janine and then how we typically handle of third party goods typically they go directly from the vendors distribution center to our stores.
But as we started to see the business accelerated because of a couple of of a bigger vendors and said, let's let's just really.
The secure with the supply chain and their ability to stay in stock and the stores and we brought that product into our stores distribution Center I think that is somewhat of a temporary move and it also it wasn't all of our vendors and it was.
Just a couple of them.
And but having done so and then competitive shopping some other stores, we're seeing that we have a better in stock position and lots of other people on our industry based on the fact that we did that.
The second piece and you called out drop ship.
When we sell product online.
Two of the customer it's coming from us to them and historically 25 per cent of the time roughly that product would be ordered on boot barn, dot com or <unk> dot com and be shipped to them from the vendor.
We've expanded our Wichita based fulfillment center, we've added automation and we've just got a really well oiled machine. There. So we have added and broadened the assortment that we carry.
In Wichita, and we've taken at 25 per cent.
Drop ship down to the basically and have roughly 10 of 12 per se.
The margin implications for us since its actually more profitable because our vendors would charge a drop ship fee, which we now don't have to pay so what we we can only do this to appoint the concerns of long tail and we couldn't carry everything that.
And our customers would want online, but as we go a little bit further.
We can control more of the supply chain and it's a bit more profitable to us and.
Hopefully as good if not a better customer experience.
The third part of your question was around shepherds.
Two of three different dates I guess for remember we changed the branding last year in our call at April 1st, but we still were very price promotional until about July 1st. So when you get the July 1st will be cycled.
And more of a full priced business.
We're now we're cycling a promotional business and so while that is a drag on top line, which we wine.
And the analysts and the investors to understand.
We're still massively up on a profitability basis on that part of our business because even in a down sales environment and our margin rate and so much stronger on the cells that it's it's great for US now once we get the July we expect that business to be.
If not positive and I'll call it flattish.
Well at its profitability profile will remain strong and of course, we still expect our boot barn dotcom business to be the the bigger winter in terms of our two brands online.
Okay, and just as you think about the difference between shoppers that continental barn, Dot com and I always thought shoppers of seeing a more promotional site. What do you think is like the biggest point of differentiation and are you seeing more cross shopping between the size or at some point do you think most customers should ultimately migrate to boot barn, how do you think about wash up on kind of stands for now you've rebranded it.
Sure the rebranding went back to its roots, which ones.
Sort of real hard core western its focus is a bit more denim based and apparel based and then boot barn.
And it's a it skews more mail at skews a bit older and.
And there are of course some.
Overlaps between the two brands, but.
Less than you might think and <unk>.
Terms of the pricing what we like the fact that we have a brand that if we needed to match and irrational.
Competitor.
That seemed critical match, a competitor's pricing that is.
Lower than.
Our stores pricing, we can chase them down with the different brand I E shufflers and not change the boot barn dot com pricing and therefore not have a big disconnect between boot barn dot com and the stores so that that strategic benefits still exists if we need it and we haven't seen a lot of.
What I would call irrational pricing behavior, and the industry and the business, which is great and.
But we do have shufflers and to try to cover it if it were to come.
Great. Thanks for the color.
Thanks Nate.
Thank you. Our next question comes from the line of Peter Keith with Piper Sandler. Please proceed with your question.
Hey, guys. Thanks for taking the question and Great results are maybe just a follow up Jim with you on the on the gross margin dynamics of the the merch margin expansion at just tremendous at all.
Are we to think that this is this changes structural in nature largely attributed to the the dynamics at the shut the resort is there some carryover effect at boot barn, and as you mentioned, it's a pretty rational environment and maybe looking forward a year or two the promotion is picking up there.
On margins could be under a bit of pressure from where they've been.
Well, let's just isolate the different pieces of your question of where we had a very very strong margin rate improvement in the quarter. You know great called out 200 bps of leverage on the gross margin line of 120 bps of of improvement on the merchant.
Margin line.
So you know those are.
Yeah, they're not merchandize margin, which I think of the spirit of your question, what's driving the merchandise margin on a consolidated basis, both stores and E. Comm is we continue to back off on.
Large sales and clearance promotions and.
And we're either going less deep or shorter duration or and.
Narrower part of the store being on sale and and as you well know Peter of the vast majority of our sales are up at full price and we're just continuing to increase that.
We are very clean from an inventory standpoint.
And as long as we've been and in years, so our clearance inventory.
<unk>.
It's relatively small always is even smaller and I think that will continue.
And for some time, particularly with the topline sales being strong and so they are and that leaves the exclusive brands and our exclusive brands.
And have really started to show strength and this quarter.
We are.
Quite pleased that went back to 250 bps plus.
The penetration growth versus last year.
And I think the outlook there is strong and and that will continue to give us margin rate improved and going forward. So we tend to fall back right back to our long term algorithm of.
And if we can increase the exclusive brands by two five percentage points that drives 25 bps of merchandize margin enhancement. We tend to then give ourselves of slightly higher target and frankly over the last few years, we've jumped brake pads both of those targets in terms of merchandise margin because of our full price selling has exceeded our.
Expectations.
So.
Yes, I might get a little bit harder to lap, but I don't I don't think at.
I don't envision a quarter and the in the near future, where we come out and say we've lost the 100 basis points of merchandise margin because of pricing pressure or increased sales of our higher promotions than the prior year period, I think that would be maybe.
Maybe not impossible, but pretty unusual.
Okay. That's a that's a good answer.
On the secondly, I wanted the did that.
Dig into that and then the comments out of the northeast stores just for years, there has been skepticism on the.
And the boot barn model of moving into the northeast. So you talked about the the store productivity metrics looking pretty solid and you've got the the four stores in Pennsylvania and now when.
When you are opening up and the northeast are you having to make any changes for the sales mix or do you see any differences and the sales mix with with the northern stores versus the rest of the base or are they kind of right in line with everyone else.
And at a high level.
The there.
Very little difference now if you were to walk through the store with the boot merchants of the apparel merchants you'd see some differences in aesthetic bye.
Western still outsells work in those parts of the country.
And.
We're seeing.
Really nice business and our ladies apparel business, but that's still a relatively small business and the grand scheme of things. So the the nice thing is the model that we have that works across 30, plus states, it's working up there with with pretty minor adjustments and.
As you will recall the boot barn brand name had some recognition and that part of the country.
And even seven years ago, and we're taking the company public and you had done that study.
So I think we're benefiting a bit when we open up of store that some number of customers in that part of the country have heard of the brand and.
And yeah, there theyre coming in and and while conventional wisdom might be that you're not going to sell cowboy boots and cowboy hats in Pennsylvania.
We are seeing that the customer show up and they're absolutely buying cowboy hats and cowboy boots.
Okay. That's the that's also the good answer so yeah. Thanks for memory and the study of a long time ago, but.
I'm sure at the trends still hold up so keep it at the good work.
Thanks Peter.
Thank you. Our next question comes to the walk from the line of Sam Poser with Williams trading. Please proceed with your question.
Okay.
And for taking my question and I have two of regarding the supply chain, which what percent of your goods are coming from the Americas now because you got a lot of boots and stuff coming out of Mexico, and how impacted or and then you of a lot of denim that also come from the Americas I think so what percent.
Of your order flow it is impacted by the reported of L, a and coming from Asia.
Yeah, and it's Greg really good question and I think I think it was our last 10-K, we disclosed at about half of our merchandise comes from China, and I don't think that's meaningfully changed.
About a quarter of the of the merchandize comes out of Mexico, whether it's leather soled boots, or denim and things like that and the balance is U S and perhaps you know some other countries, but a lot of our supply chain comes through the ports and southern California were pleased that that <unk>.
And to be getting more on track there are still delays, but I think there was delays have you know of.
I've gotten better bye.
50%, if you will so we feel pretty good about that and we continue to chase after product and and and.
Protect the supply chain, but so far I don't think it's.
Had any meaningful impact on our top line.
Thanks, and then secondly, with a 40% comp that you ran on the boot barn, and dot com business and.
And.
You'll get at inventory question from me because I never can resist.
The point of view.
And Sam.
Yeah, I understand that but I guess my question is what were the learnings you got.
From sort of the seeing what people actually go to online.
And how is that impacting the way you assort the stores now and.
And now that you are running with as you mentioned your inventory levels on the store base and at the store by store basis at a relatively low.
Is this.
Do you want to build them back or is this a are you at a good point here where.
You're taking learnings from online and applying it to the stores and then being able to achieve.
Your objectives with slightly less inventory.
Yes, Youre absolutely right.
We have the ability to get reads on line and feed those learnings over to our store merchants.
And as we see things emerge on our E Commerce business.
And then either bring them to the stores or expand and more quickly than we otherwise would.
And the other things we're excited about it.
More and more of we have the ability to.
Fulfill our e-commerce demand from our stores inventory. So one thing where we're thinking about is can we bring some more of the.
More exciting merchandize into some stores and use it as a mechanism to drive a better in store experience and even if it were to turn relatively slow in store. We can then sell it down and using our ecommerce channel so both of.
Of those things are in play in terms of overall inventory levels and we're trying to get back to where we were I would say we've learned that we can grow you know really topline business on a little bit less inventory with that said, we do wish we had.
Maybe not down.
The 0.7% or something like that but you know down 5% versus last year on a comp store basis might be fine.
And so what we as you know we have a philosophy of is we always want to be in stock.
With all sizes, particularly and footwear and.
And that requires a healthy inventory investment.
And but we probably can run a little bit leaner than we had and the most recent few years.
Yeah.
Thanks, very much and the continued success.
Thank you Sam.
Thank you. Our next question comes from the line of Paul <unk> with Citigroup. Please proceed with your question.
Hey, Thanks, guys Jim on the last point, just talking about inventory are there any places where and category of specifically, where you feel more constrained and than others or maybe even the <unk>.
Another question is is there.
For a point in time and you see that there may be some constraint just based on your ability to replenish goods and in certain categories.
And I guess, along the same line talking about inventory and GE.
And you plan to manage inventory as we kind of think about the quarters throughout the year. Thanks.
And how long of a thing.
So in terms of the.
And the different categories of the business. So the the good news is.
The big drivers of the business.
Our number one either.
Either entirely and stock or mostly and stock.
And number two having easy substitution effect right so work boots.
Blue jeans mens cowboy boots.
Ladies and cowboy boots, maybe two of somewhat lesser extent are our number one our inventory position is pretty good.
And maybe with some opportunities here and there.
The number two if someone comes in and they're looking for a particular of lace up work boot and we don't have the exactly that one there is a very logical substitute for it.
And and by the way I do need to call out that.
This has been a result of and.
And enormous amount of work by the buyers chasing orders and putting orders back in place there for some vendors of canceled them et cetera. So they are they are working to make this happen and I think it's part of the reason why our results seem to be outpacing the industry's results.
The the businesses that are.
And the buyers and the merchants who were working even harder all of the businesses, which are smaller for us.
But so important which is sort of bleeding cash and apparel again, you know, it's a smaller piece of our business.
But that business has performed extremely well.
It tends not to be on automatic replenishment and we do have to make commitments on somewhat of a more traditional seasonal basis at.
And we just were not able to forecast the strength of the business.
And that we're seeing in the first quarter or even in the fourth quarter and frankly, if you even go back from the third quarter call. We saw some real nice strength and ladies apparel.
With that said through sort of all.
Our hard work and and a lot of agility.
Already we've had the ability to to find the vendors and and get some of that product in place of that business continues to be very strong, but that's the one place that we have some exposure, but we've been managing through it by frankly, just by hustling like crazy to find that product.
And in different places.
Got it and then.
Jim I don't know at the last time gives us a number of I think the remember maybe it was a couple of years ago, you talked about 95% of your assortment and sold at at full price for you know all outside of any promotion.
Let me know if I'm misremembering that I'm kind of curious if you know how low does that number ever get to and where are we now.
So yes, what we tend to use words like the vast majority of because it becomes a little complicated to nail down a particular number but it's you know I would say at 75 per cent plus of the stores business.
Shufflers and.
And it used to be highly promotional as less so now so I would say you know even on a consolidated basis, we're probably north of 75 to 80 per cent of of the business and.
And.
The balance is all of the clearance product and and and occasional.
Promotion that we're running for mother's day or for father's day.
How much smaller and that debt I think will always want to have.
Promotional activity and the stores just a the customer does exist and and sometimes looking for a sale and at it also gives us the ability to show some freshness by rotating through some items you know in and one month that might be on sale and some items and the next.
And at the end sale.
And perhaps one third thing that might remain and our DNA for time, Inc.
Oftentimes when we're trying to launch a new category of our exclusive brands and the.
Order to try to get.
Fast or trial, we'll do some kind of modest promotion today, you know of Cody James genes and.
And to People's Closets and.
And so.
If the question, but on the question is do we have ongoing opportunity to do even a better job of more full price selling.
The answer is yes, and I think we will get.
Diminishing marginal returns as we go forward, but I don't think we're out of ideas.
Got it. Thank you good luck.
Thank you. Thank you.
Okay.
Thank you. Our next question comes from the line of Mitch <unk> with pivotal research. Please proceed with your question.
Yes, Thanks for taking my questions I've got I've got two on the.
The sequential improvement of the business. So you guys. I think you said of plus 67 quarter to date on the two year and then for Q4 was the plus 30 for I guess my first question on that is at plus 34 is there any way you can give us the breakout by month and it sounds like there was a lot of things happening in the quarter and I was just kind of.
And how those months worked on the two year basis, and then I've got a follow up.
Sure.
So your way you called out the number is perfectly from Q4 into Q1 on a two year comparison basis in total net sales.
Gone from approximately plus 30 for two plus 67.
In terms of sequential improvement between the quarters.
Everything has improved basically and the one business that continues to be.
Negative is at.
And F. Our work apparel.
In terms of if you wanted to break it down and two monthly sequential two years.
And it gets it gets a little.
And messy, but the quick answer is we've seen sequential improvement from February to March March to April.
And then a slight sequential deceleration from April and May which is in the in the ER.
And the earnings release.
The message and it's comes.
On.
And.
February and March of fiscal 2020, one we didn't have radios.
And in February March of fiscal 2019, we did have radios and Texas and that's meaningful enough to register on the total cells based on it so.
We've seen a really nice progression very nice sequential improvement part of it is overstated a small part admittedly by the fact that rodeos existed two years ago and didn't exist this year.
And in February and March in Texas.
And Mitch and then just one of them.
Mitch and I just want to clarify I think you said, 34% our total growth and Q4.
And was 37% to the prior year.
I was looking at the I was looking at the two year I thought it was 34 calculated at 34.
Got it but alright, but anyhow my my my second.
Question just again.
As it pertains to the sequential growth.
Is it fair to say that the bulk of the improvement is happening and these discretionary category categories categories that might be more dependent.
Upon social interaction and I'm just trying to understand.
Is the money flow into the discretionary because its stimulus dollars that tend to be used.
The discretionary income and people are spending at or is it more because we're kind of starting to enter of post COVID-19 environment and people are interacting socially again and so those dollars are flowing to those categories that have been depressed for the for last year, how do you see that.
So I think the second piece of what you said of the is a huge factor I think people are just.
Refreshing their wardrobes.
Yes, there are some conversation around and they need new sizes.
Up or down.
It's not passing judgment Greg.
But there's also just the you.
You called it right people are our going out more people argue on the restaurants more of their going out as far as more and they're wearing you know and are our core customer, whereas our product and they they want new outfits at plain and simple of part of it and certainly stimulus I I'll just tell you the way we think about at inter.
He is we saw the jolt of stimulus in the third and fourth week of March.
And it was a jolt it was the very positive jolt and immediately the next week. The business came down slightly but then have kept pretty close to that level for the next five or six week. So.
Stimulus is in the system for sure.
But it seems to be more than that now given the duration of the strength of the business and it.
It just seems to be more macro consumer trends you know people buying.
The new pairs of the pants, and and new footwear Youre right that if you want the really parse out the sequential improvement work boots was strong and is still strong and and slightly stronger, but the other categories and the more discretionary categories are.
And I have improved pretty significantly over the period.
Okay. That's helpful. Thanks, guys.
And of course, thank you.
Thank you. Our next question comes from the line of Jerry Hamblin with Craig Hallum. Please proceed with your question.
Thanks, and congrats on the tremendous performance I wanted to come back to the gross margin for a second here and the the.
The improvement and shrink.
Pension just for the magnitude of at 120 basis points I think you called out.
And in terms of thinking about it.
The inability of that you know that's the.
Pretty high.
Year over year change and shrink.
Is that something that you feel like the rest of it.
Fiscal 'twenty two that you have.
<unk> from gains you can make on that or is there something maybe specific in.
In that quarter.
At the allowed such of a large gain.
Really good question Jeremy.
The way I think about it is in the first half of the year our store sales worth.
Somewhat depressed right more depressed and the first quarter than the second quarter and of our teams really took that opportunity with reduced customers and the store to provide outstanding customer service and I think that that helps us manage our shrink levels right and.
So I do think of piece of that was was opportunistic and they made the most of the customer traffic that came and the store.
And so that may not be as repeatable, but if I were to parse out.
How much of the 120 relates to that it might be 20 basis points or.
For a 30 basis points.
The balance has been really just being focused on both I'll say paperwork and and all of that paper shrink stuff as well as.
You know again outstanding customer service and paying attention to people of return you know turning and known facts all of those kinds of things. So I think of lot of that sticks with us as we move through fiscal 'twenty two.
Great and then.
Terms of thinking about channel performance you know moving for you you talked a little about shufflers and the dynamics there but.
And thinking about the.
The outperformance that you're seeing.
Retail same store sales.
And the March quarter, there's obviously from some dynamics here.
In the current quarter, but in terms of thinking about the back half of the year when.
You know all of your stores there'll be a ramping period in which they were all open.
Just thinking about that and and expectations around which channel of business you expect to be.
The higher in the back half.
Of this year.
How should we be looking at at that you know do you do you think that retail stores are kind of continue to outperform.
And if so why.
Okay. So.
It's very good question and and as Greg pointed out where we're trying to avoid providing real guidance on sales because it's just so complicated with so many macro factors and I think we can give you some.
Color commentary on that and.
First just a small point of clarification and I mean, the the retail store business versus the campers and retail stores will still be 80, 20 versus the commodity retail stores will continue to be the vast majority of the business. I think you were asking about the growth rate, which I will address.
One other minor point for for the benefit of everybody listening on the call. Our stores were opened last year now business was depressed and many markets, but one of the things that and has enabled us to capture new customers and build our market share was the fact that we stayed open and.
And.
Most markets not every market every market that we legally could we stayed open.
Youre right the call out at the retail store business will start to cycle stronger comps as we go forward.
And.
On a consolidated basis and the second quarter, we cycle of minus 551, something like that so I.
At.
And unless something changes massively we should be able to outperform in the second quarter.
In the third quarter, we returned to positive comps and if you went back through our third quarter call.
I think were of plus five is for six and.
And we actually had positive retail store comps there.
Low single digits, but notably that was on negative transactions. So.
And I certainly do not have the ability right now to project, what's going to happen in the holiday period of this upcoming year.
But if this were sort of a normal year I'd say you know we have from the stores perspective, we have.
At a relatively straightforward compare.
In the L y period.
When we get for the fourth quarter of this year at gets much more complicated right. We had stimulus driving growth in January and stimulus driving growth in March.
The offset to that pressure will be hopefully a full and fiber and rodeo season in Texas, the that's going to be very hard to parse.
Parse out, but I must say from the very hard to cycle, our March business with a positive comp I mean, our March business was so incredibly strong.
But we will still have on an absolute dollar basis, a very healthy very profitable month of course.
So that's the best I can do to give you a sense for how we view the upcoming quarters from the stores perspective the.
E Commerce business is and cycling strong business day.
Pretty consistent quarter to quarter from a growth rate perspective.
That's helpful keep up the great work guys.
And thanks Jeremy.
Thank you. Our next question comes from the line of Jay sole with UBS. Please proceed with your question.
Great. Thank you so much for taking my question Jim I just wanted to ask you about some of the actions you took it sounds like a couple of months ago about positioning inventory and maybe just changing on some things how you doing of the supply chain to be ready for the.
At this moment, where stimulus Scott you know.
Was the big help and consumers came back what was the insight that you had into your consumer that gave you confidence and take those actions and do things differently than maybe you had done in the past head on.
Of.
January February March and April sales.
So what insights into the customer. It's a good question, we do have a customer that needs of our product is more.
And oftentimes has functional reasons for the for buying our product et cetera.
So we did see some strength.
Building earlier and I'd say, the other thing, though and this is the bad debt we made.
But it was a it was a debt with with the low downside risk which was.
Given the fact that so much of our product and replenishment base and low fashion and low markdown risk.
And many other retailers were.
At the mall based retailers were slower to get customer traffic, perhaps through no fault of their own.
He said well, let's let's just.
Kind of be aggressive from an inventory standpoint and.
Buy into a stronger than perhaps expected sales trend.
And it just it at it turned out to be it turned out to just work out really well and and again the credit really goes to the merchandising team that made that happen.
And but it was a it was sort of and easy bet to make I guess on all of them, saying is the.
Because if it didnt work out all we would have had at a slower inventory turn at a huge margin.
The rate degradation.
And.
And on the second part of at all all we did was take some of some vendors product into our distribution center to make sure we had.
Total security that we could stay in business in the stores and that has worked out really well as well I do think we will transition out of that pretty quickly that's not our model, but we had the space to do at we had a team that could step up from a distribution center standpoint, and get it done so and we brought on some of that.
Product.
Got it okay. Thanks, so much.
Thank you.
There are no further questions at this time I'd like to turn the floor back over to management for closing remarks.
Well. Thank you everyone for joining the call today, and we look forward to speaking with you all on our first quarter earnings call.
Sure.
This concludes today's teleconference. You may disconnect. Your lines at this time. Thank you for your participation and have a wonderful day.