Q4 2021 Shoe Carnival Inc Earnings Call
Across the hundreds of communities we serve.
We will get selected shoe Carnival, where families spoke buyer shopping experiences.
I have the pleasure of opening todays call by reporting that shoe carnival generated more profit for our shareholders during 2021 and the prior six years combined.
Furthermore growth momentum remained very strong at shoe carnival.
No doubt 2021 presented a challenging macro environment COVID-19 .
COVID-19, and supply chain disruptions required our exceptional merchandising team and operators to navigate ongoing complications.
Inflation and a tight job market made clear how essential our team members are and how important our commitment to invest in competitive wages compelling benefits and long term career growth is.
One element was constant for shoe Carnival every quarter in 2021, our customer shop in person at record levels and when they did the merchandise assortment delivered on their family's footwear needs.
Sales grew 36% for fiscal 2021 with every quarter growing double digit versus 2020.
We were most encouraged with the sustained market share growth achieved as every quarter grew over 20% versus 2019, which we view as a more normal sales profile without the pandemic disruption in 2020.
Millions of new customers experienced shoe carnival for the first time during 2020 after reopening our stores following the pandemic shutdown.
Our team in 2021 focus was to leverage our advanced CRM and digital marketing capabilities to convert these new customers.
The plans work exceptionally well for example, Q4 marked the seventh consecutive quarter of comp store growth and the sixth consecutive quarter of record earnings per share delivered.
Growth was driven by double digit store customer traffic increases and the acquisition of over 3 million new loyal customers versus the prior year.
Total Q4 sales grew 23% with exceptionally strong holiday sales generated from the hottest athletic and non athletic brands and styles for the family in stock.
Despite the omicron variant searching in Q4, our customers shop in person during the holidays at the highest levels in our history.
<unk> gross margins for the entire Q4 at 37, 4% up 650 basis points compared to Q4 last year.
Carlin Kerry will discuss the margin results and sustainability of it shortly.
Sales momentum has continued into fiscal 2022.
We expect to deliver another sales record in fiscal 2022 with sales growth of 4% to 7% on top of the 36% growth achieved the prior year.
We aim to surpass one for $1 billion. This year, which will result in shoe carnival sales, 43% larger on a two year stack.
For the first six weeks of fiscal 2022, net sales continued to grow driven by strength of customer traffic gains.
The second half of Q1 and Q2, we're up against large government stimulus funds in the prior year, which we're not anticipating being funded again this year.
As such we anticipate the first half of 2022 to generate net sales between flat and low single digit increase.
Once we lap the major stimulus funding, we forecast mid to high single digit growth for the remainder of 2022.
I would like to turn now to our strategic plan to transform shareholders profit.
In 2019, we set a long term objective to increase our operating margins from the historical 4% to 5% range, which was lagging the competitive set to our long term ambition to exceed 10% to.
To accomplish this objective we invested in consumer technology analytics and hiring top talent. So we could build out advanced customer relationship management and digital marketing capabilities.
These investments resulted in profit generation faster and higher than we expected.
For the full fiscal year operating margin and EPS more than doubled versus our historical averages.
For the fourth quarter, despite the supply chain cost headwinds and average hourly wage inflation earnings per share grew 177% versus the prior year and 500% on a two year stack.
For the full year earnings per share grew 271% versus the prior record achieved during 2019, resulting in a return on beginning equity of 49, 9%.
Looking forward, we see our business model generating high levels of cash flow and gross margins.
We do not see the 49% return achieved in 2021 being the norm. However, we have plans in place and now sustained double digit operating margins and earnings per share more than 250% higher than the pre pandemic levels.
Turning to store productivity and growth.
The full fleet is healthy with all comp store cash flow positive in the chain generating sales over $300 per square foot with these results achieved we have now completed our multiyear historic productivity improvement plans and forecast limited if any store closings for the next several years.
Our store modernization plans continue to generate accelerated sales and positive customer feedback.
Our athletic shop in shops, with our brands, our customers love and seek out is playing out as a compelling traffic driver and a competitive differentiator.
With net sales and gross margins over performing expectations. We are again accelerating capital investments for this program.
We now aim to complete our modernization program across the fleet by the end of fiscal 2024.
As we concluded fiscal 2021, approximately 20% of the fleet Remodels were complete.
Over 100 more in flight and plan to have approximately 50% of the fleet complete at the end of this year.
Our first acquisition close successfully on December three 2021, acquiring the assets of the Leidy southeast retailer shoe station. Our original plan was to complete the back office integration by late 2022, and then begin rapid store growth into 2023 2020 for horizon.
I'm very pleased to share today that the teams did an amazing job and the back office integration is complete six months ahead of our expectations.
With this rapid Smiths start we have shifted resources to store growth mode and building advanced CRM capabilities for the new banner.
We're seeing encouraging opportunities to grow our new banner with complementary consumer demographics, and real estate locations to the shoe Carnival banner.
The real estate and analyst teams are deep into our CRM data and finding many promising markets to expand into.
With both banner stores productive and generate strong cash flow, we are moving into store growth.
For 2022, we aim to add over 10 stores to the fleet then accelerating over 20 stores annually beginning in 2023 through a combination of organic growth and opportunistic acquisitions for a strong regional or local player exists.
Turning to shareholder value.
We forecast earnings per share to be in the range of $3 80 to $4 10 for fiscal 2022 compared to $1 46 in fiscal 2019.
This will generate a return on beginning equity between 24% and 26%.
Additionally, with our strong cash flow and balance sheet for raising our dividend by nearly 30% after raising it 50% last year carrier will discuss this shortly.
Closing shoe carnival growth momentum is strong despite the challenging macroeconomic environment.
2022 will be yet another record growth year, thanks to our exceptional team and rapidly expanding loyal customer base.
I would now like to turn over the call to call.
Thanks, very much Mark as Mark said, we are delighted to report our strongest ever fourth quarter as well as our best fiscal year ever.
Delight several areas that were key to delivering our outstanding performance.
The first is we are winning with loyalty and brand building through our ongoing investment in CRM, we understand our customers better than ever this.
This enables us to continue to execute our promotional strategy using data intelligence drive customers into our stores and online.
These targeted personalized promotions have been a key component of our innovative marketing plan and has served us well since we implemented it over a year ago. Our best in class CRM is driving record sales and gross margins and as we saw in the fourth quarter and consistently drove higher customer acquisition.
<unk> retention and reactivation all at the same time with the use of the valuable consumer insights. Our CRM provides we can leverage deeper engagement across both online and in store channels.
Stellar results, we announced today are the strongest evidence to date our strategy is working.
Secondly is our unparalleled vendor relations our merchandise story is above all one of overcoming supply chain challenges through working with our vendors daily to minimize the disruption being caused by the global supply chain issues in this challenging environment, our vendors are highly selective with.
Their inventory allocations and many do not have the capacity to supply demand from retailers in the mall department stores and discount stores customers want brands and they will go to retailers, where they can reliably find those brands.
Giving our firmly embedded relationships with our vendor partners. We continue to stay stocked with a variety of depth breadth of the hottest in demand products. As a result, we are uniquely positioned to capture customers dislocated from other sources, which are no longer able to cater consistently to customers needs.
We saw the power of those relationships throughout every quarter in fiscal 2021. The outstanding results became we had the right products at the right time as a result, we enjoyed an exceptional holiday season. During the final weeks of 2021, we generated record sales and six times earnings per share.
Compared to the fourth quarter of 2019.
That said our industry faces potential challenges to spring consumer spending will be impacted as the stimulus programs of 2021 are no longer in the supply chain inflation issues continue.
We are immune from these challenges, but thankfully we are well positioned to continue to increase our market share due to our strong management and vendor relations.
Our inventory levels are up versus last year, and our stores are ready for spring selling.
And we are winning with strong merchandise categories and Assortments as Mark mentioned customers shopped in person for the holiday needs drilling down to consumer trends, we are seeing customers back to buying non athletic shoes.
Across customer groups non athletic sales grew by over 20% in the fourth quarter, while Atlantic continued to grow by low teen percentage points.
Currently we have a 50 50 non athletic athletic merchandise portfolio, which has us well positioned for growth and mitigates risks related to changes in consumer demand. We feel this balance gives us an advantage over competition.
Q4 continued the pattern of business normalization that we saw in preceding quarters as our brick and mortar customers responded very positively to merchandise and storage strategies comp sales in the fourth quarter versus 2020 were up 17, 7% and up 25, 3% versus.
2019.
We are also delighted with our ecommerce business in 2021 E. Commerce sales grew 146% to over $160 million compared to fiscal 2019.
While we don't see the explosive growth of the post pandemic environment, we do expect our thriving ecommerce channel to play a significant role with our customers as they balance their new hybrid work life and lives are E. Commerce margins as a result of these evolving customer trends were 880 base.
<unk> points higher compared to Q4 2020.
Improving last mile delivery is a key aspect of e-commerce during the fourth quarter, we became the first in the family's footwear channel to launch same day delivery in partnership with door Dash in late December we are proud of our team's ability to launch this innovative offering to benefit our many busy last minute holiday.
Shoppers.
Going forward, we expect e-commerce to be a high single digit low double digit long term growth area.
We will continue to be an omnichannel growth story as we provide a highly complementary bricks and clicks offering that provides our customers with winning merchandise and high quality service they've come to expect from us.
As Mark mentioned, we continue an aggressive rollout of our store modernization program.
We want our customers to fuel the joining fulfillment of in person shopping in our stores.
Our efforts are moving fast we will complete modernization of over 100 stores in 2022 and half the fleet will be completed by year end our stores have been open modern clean look that facilitates a pleasant browsing experience, our digital displays and brand shops connect customers.
The trends in the promotions they seek.
Our athletic shops continue to rollout.
Our assortment of brands and our strategic vendor partnerships with the top global Athletic brands are strong these.
These environments are motivating and more customer stepped through the door and browse.
As we continue to invest in new store designs are shoe station prototype flagship store is well underway and will open later this year.
Our integration of few station is ahead of schedule.
We have worked with our vendor partners from the shoe station business and we are mutually excited about the future growth opportunities ahead.
Our southern based shoe station buying team is engaged and ready to go.
We expect modernization of all existing 21 stores to be completed along with our company wide modernization strategy above all our people are friendly knowledgeable and always put the customer first in fact customer first is a core value and key differentiator in the category now turning to resolve.
Yes.
All merchandise categories comparable store sales for the quarter were up double digits versus 2020 and margins were up 710 basis points for the same period, and a 1030 basis points versus 2019.
Even though inflation could have some effect on margin levels in 2022, we feel the changes in our promotional strategies and the power of our senior loan program has fundamentally changed the merchandise margin levels for the company going forward.
<unk> comparable store sales in the fourth quarter were up in the low twenties, both athletic and non athletic sales were up over 20% men.
Mens non athletic comparable store sales were up in the high Twenty's sales were driven by both the dress and casual shoe categories women's non athletic comparable store sales were up in the low twenties sales were driven by dress casual and sport shoes adult athletics were up in the low double digits.
As mentioned earlier on our previous calls non athletic shoes across men's women's and children's had many huge comeback.
Our team of seasoned merchants continue to navigate through supply chain challenges with the same anticipatory approach to sales and inventory as they have throughout the pandemic through their hard work and excellent vendor partnerships. The team was able to deliver the products customers want it to generate these outstanding results Despite India.
Free wind near term headwinds, we feel we are well positioned to succeed in fiscal 2022 with a strong inventory position.
Fiscal 2022, beginning inventories per store were up in the high teens versus 2021 and mid single digits versus 2020 with that now let me turn the call over to Kerry Jackson.
And more insight into our financial performance for the quarter and full year. Thank you Carl.
It's exciting to share with you some financial highlights from the best fourth quarter and the fiscal year the Companys history.
We achieved a record fourth quarter with net sales of $313 4 million, an increase of $59 5 million or 23, 4% compared to the fourth quarter of fiscal 2020.
Comparable store sales increased 17, 7% for the fourth quarter of fiscal 2021 compared to the prior year.
Our brick and mortar comparable store sales were up 22, 1% and E. Commerce was mostly flat in the fourth quarter compared to the fourth quarter of 2020.
Fourth quarter 2021, gross profit margin was 37, 3%.
Our Q4, a record high for shoe Carnival and up more than 650 basis points compared to the fourth quarter of 2020, driven primarily by continued strength in our merchandise margins in the quarter.
Excluding one time acquisition costs, our Q4 gross profit margin was 37, 6%.
Buying distribution and occupancy expenses decreased 140 basis points as a percentage of sales when compared to the fourth quarter of 2020, despite higher supply chain expenses.
These results clearly underscore the successful execution of our merchandising strategy highlighted by Mark and Karl earlier in the call.
SG&A expenses increased by $21 3 million in the fourth quarter of fiscal 2021 to $88 9 million.
As a percentage of net sales these expenses increased to 28, 4% compared to 26, 6% in the fourth quarter of fiscal 2020.
Excluding onetime acquisition costs SG&A expenses in Q4 were $85 7 million or 27, 3% of net sales.
The increase in adjusted SG&A was driven primarily by increased investments in advertising and store level wages.
Operating income was 27 9 million or eight 9% of fourth quarter 2021 sales.
In comparison operating income was $10 6 million or four 2% of sales in the prior year quarter.
Adjusted operating income in Q4 was $32 2 million or 10, 3% of net sales.
Net income in the fourth quarter of 2021 was an all time fourth quarter record of $20 6 million compared to net income of $7 4 million during the same period last year.
Earnings per diluted share for the fourth quarter of 2021 increased by 46.
To a record 72 per diluted share.
Adjusted net income in Q4 was $23 8 million or <unk> 83 in diluted earnings per share.
We closed out the quarter with inventory of $285 2 million.
Which was up $51 9 million compared to the prior year or 19, 2% on a per store basis.
A little over half of the increase in inventory was due to the 21 stores acquired in the shoe station acquisition.
We have ample liquidity to fund our growth through store expansion and modernization target further acquisitions, while continuing to build cash on our balance sheet.
As of January 29, 2022.
We had total cash cash equivalents in marketable securities of $132 4 million and no outstanding debt.
We have more cash on hand than last year, even after paying for the shoe station acquisition in cash.
As we invest for future growth, we continued follow through on our commitment to shareholder return.
In addition to our current share repurchase authorization, our board of directors approved the payment of a 29% increase in our quarterly cash dividend to <unk> <unk> per share from seven per share previously.
Turning to our longer term outlook.
As we continue to see momentum in our business as we've come into March and based on our expectations continued strength.
We expect fiscal 2022 net sales to increase mid single digits.
The $1 38 billion to $1 2 billion.
And earnings per diluted share for the fiscal year to be in the range of $3 82.
<unk> to $4 10.
In closing this morning, we announced the best results in our 43 year history.
Looking ahead with continued strength and success of our fast growing Omnichannel sales model, our transport profitability profile all supported by robust cash flow, we are better positioned financially the nerve report execute on our growth strategy, which.
Which combines organic store expansion and monetization on one hand, and selective acquisition strategy on the other.
With that I'll conclude our financial review now.
Now I'd like to open up the call for questions.
If you'd like to ask a question at this time. Please press Star then one on your telephone keypad.
Our first question is from Mitch <unk> with Seaport. Your line is open.
Yes, thanks for taking my questions and congratulations on the quarter and the year.
Got a few questions you guys have referred to momentum through the first six weeks of <unk>.
Q1, I was hoping you might be able to quantify that and I would be most interested in knowing how.
That performance compares to the first six weeks of 2019, if you happen to have that.
Good morning, Mitch Mark.
Thank you for the congratulations we're thrilled with the way last year concluded and that momentum has carried into the first six weeks of fiscal 2022.
We're great confidence based on the start that we can continue to grow and have a record 2022. This year as we've said growing 4% to 7% revenue range.
Specific to the first six weeks.
We are seeing continued strength in store traffic and people coming up despite all the macroeconomic things going on.
And we're very comfortable.
Before we started lapsing the stimulus we were seeing high single digit type growth much.
Compared to the prior year.
Okay. That's helpful and then.
Marc you kind of broke out the year first half second half in terms of.
The year over year.
Sort of.
Quick back of the envelope math that I've done.
Again, what I am trying to compare this to 2019, which would collapse.
Over the year.
That kind of implies high twenty's growth in the first half high <unk> growth in the second half versus versus 2019 I can appreciate the lapping of stimulus on a year over year basis.
But I'm kind of curious why more growth in the back half versus the first half when you compare it to that pre COVID-19 does that is that mainly kind of inflation and supply chain. That's holding back the sales go up a little bit in the first half that you would expect to kind of be alleviated in the back half or is there something else going on.
Yes, youre right regarding versus prior year. It is purely the stimulus that's going to be challenging for retail for the next month or two and then we get into rapid growth. Once we start lapsing that if you look two years back.
No doubt the supply chain and inflation are challenging headwinds that everyone's facing at this moment of time and we expect that to continue to be challenging for us to navigate.
Our merchants.
As we talked about last year.
Navigated it with astonishing nimbleness and were able to secure the inventory we needed at our stores well stocked when customers were there and we have confidence we're going to do that again. This year. However, compared to 2019, we're not immune to there are delays in shipping there are delays throughout this.
<unk> chain and inflation is causing consumer sentiment to be different than the 2019 with all that said, we have great confidence we get beyond that.
Coming weeks as we head towards back to school, we're positioned very well to accelerate growth.
And then Mark you mentioned double digit operating margin is kind of a new sustainable level for the company that's up.
I think over 500 bps from where you were pre Covid can you just.
Talk about the structural changes that you've seen in the business.
Got you to this new level I mean, I would imagine a pretty good piece of that is going to be.
<unk> and your ability to be more targeted and strategic with your promotions.
If there is anything else that you might want to refer to the to help explain.
That lift in margins, whether that's market share gains that you've taken that helps with the fixed cost leverage I mean can you maybe kind of go through some of those components.
Sure I'll highlight three of them that are key drivers versus our investment to build advanced analytics and CRM capabilities like you've touched on.
At this stage of gaining leverage from those systems, we've been investing in for multi years and gaming tree fruit of it.
Can target consumers effectively we can promote far more profitably and still generate the top line we want.
That's going to be a key contributor.
That capability and our merchants.
Excellence has enabled us to eliminate.
Historical buy one get one half off and other deeply unprofitable promotions, we used to do.
Between those two key elements, we can sustain margins significantly higher and Carlin Kerry can build on that.
Third.
The job environment is tighter than I've seen in my nearly 30 years and we have made a conscious decision to invest in our employees invest in.
<unk> pays for them invest in benefits and invest in career opportunities and so I'm thrilled today to share that affected this year all full time employees at shoe Carnival will be earning at minimum $15 per hour and this is allowing us to invest in having the best.
We need in our stores that customer first mindset.
So two major tailwind from more analytics are helping increase our gross margin and then an investment in our people helps us win but also puts pressure on SG&A pulling down.
You have some of the high results and that 49% return on equity we delivered this past year.
Okay.
Alright, guys, thanks, and good luck.
Thank you Mitch.
Our next question is from Sam Poser with Williams trading your line is open.
Okay.
Thank you. Thank you very much thanks for answering my questions.
I was just wondering if you could.
Just give us some details on the sales by the sales increases by month for the same store sales increases by month in the fourth quarter.
Given how.
There was some stimulus lapping in January .
Hi, Sam Good morning, it's Mark again.
I can share that with you in Q4 was exceptional at delivering over 23% growth overall and over 17% comp it was <unk>.
Driven by holidays, we had never seen stronger holiday traffic consumers are flocking in person back to our bricks and we saw over 20% comp growth for both the month of November and the month of December turning to January that was the unknown when we spoke to everyone laughs, but what would be the.
Impact of not having the stimulus funds, which were in our consumers' hands the prior year.
We had expected.
<unk>.
And over 20% sales decline in January and we're thrilled we far outperformed back in.
In fact for the month of January we had a mid single digit decline again, beating our expectations by over 10%.
It was a great learning for us to Sam to show US. We grew so many new customers and we're able to talk to them a CRM that we've been able to grow market share.
This past January offsetting some of the stimulus money that was there last.
Thank you and then.
Number.
Retailers within your markets are losing access to one of your large.
Our largest vendor.
And others have closed how but.
But I've also heard that some of that may some of that product flow because of the delay isn't happening as quickly as anticipated.
Do you foresee that helping or I wont say, all but impacting your business.
This year.
We talked about our store modernization plans.
Citing us and accelerating our plans to have the whole fleet accomplished one of the things that consumers are gravitating to is our athletic shop in shops.
And so this year, we have in flight another hundred 100, plus.
<unk> rolled out with the best brands that those consumers are shopping for across channels and are delighted when they can find them in our athletic shop in shops.
The brand experience the full price realization the way that brands love seeing them come to life does that shoe Carnival, we believe.
Better than anyone in the channel and.
So we're moving full steam ahead and plan to have the entire fleet have athletic shop in shops by the end of fiscal 2020 for Karl to build on our vendor base to of how excited we are about that.
Sure Sam.
While we don't talk about individual vendors on the call well what I will tell you is.
The top five.
Atlantic brands from 2021.
<unk> produced 37% of the Companys business and in 2022, those same top five athletic brands are projected to equal the same 37% of the Companys business.
And does that include the shoe station acquisition.
That that includes those particular numbers out of the shoe carnival the.
The shoe station acquisition carries a storage period different merchandise Mitch.
Mix with access to some of the other.
More premium running brands and.
And we don't see a change in the way they have historically been assorted.
And then.
Your store opening plans to open 10, plus stores this year and 20 plus stores next year can you give us details as to what the.
The composition of that is between Schuh station and shoe Carnival.
Because I know you don't plan to close I believe you said youre not going to closing those stores are no glad to close any stores this year.
Yes, that's correct them.
For 2022, we plan to add at least 10 stores.
<unk> share of those will be shoes station.
We'll be adding shoe carnival, but the vast majority of this year will be shoe station as the real estate opportunities, we see there so exciting.
Analytics, we're just diving into are pointing into how we can explosive flee multiply that fleet number over the next few years as we get into 2023 and 2024, we're pursuing growth at both banners.
Our aspiration to have double digit net store count growth for both banners, we do see more opportunity for schuh station based on the mere size, it's a small footprint and we have so many states that we can bring this great new brands to buy.
By 2024, it's our ambition to be 25, plus additions a year.
Incredibly energized.
Only thing keeping us at best low levels as for Ida.
Starting from scratch right now to get real estate.
If more real estate becomes available those numbers will go up quickly.
And then lastly, when you acquired two station you said that.
You anticipated around $100 million in revenue in 2022 Horseshoe station, but I don't imagine that that included opening as many stores as you are now opening.
So is that $100 million still the number or has that number gone up.
And then when we think about over the next two years, I mean, youre going to add more than 50%.
Store growth.
Almost 100% growth by the end of next year, probably so how should we think about that shoe station revenue.
Now they're worth three five months deeper into it we have even more conviction with what we've acquired this brand.
Growth of profitability.
So energized.
You should think about this year is we will deliver what we said the 100 million built in some thought of store growth and with where we are in the year Sam when we talk about those 10.
Most of those will be Q4 or towards the very tail end. So it will have limited impact on this year sales and profits, but as we go into next year, that's where we can start to really ratchet. It up and you are right you should think about what the numbers I've just said, we'll more than double potentially triple.
Store footprint for that banner within two to three years, and we will commensurately more than double the revenues of that banner in that same time, so and that.
And then I'll ask that sorry, lastly, again.
The sales.
The margin structure, especially once you get the CRM all set up.
Merchandise mix.
Is radically better.
Shoe station than it is at shoe carnival, because theres less mix of a.
Lower margin athletics.
Sure.
Think about it as well.
It's fair to think about it we.
We see the margin and profitability structure lining up with the shoe Carnival banner numbers that we've.
<unk> guided to we see them very similar there's absolutely potential as we identify more synergies and get more into the buying and merchandising functions severe Ed is absolutely more potential for that trend to drive higher operating margins and higher margins, but at minimum we see it lining up with there.
This new reset profit levels for shoe Carnival.
Thank you very much continued success. Thank.
Thank you Sam Thanks, Sam.
Again, Thats star one to ask a question. The next question is from Jim Chartier with <unk> Crespi Hardt. Your line is open.
Good morning, Thanks for taking my questions.
I just wanted to follow up on some of the previous questions.
Do you expect share gains related to nike's exits from other retailers.
Then the expectation for the penetration of your top five athletic brands being similar to last year is that due to stronger growth in non athletic business. This year. Thanks.
Okay.
Hi, Jim This is Carl we do see we do see growth in both athletic and non athletic for.
For 2022, however, we do see growth at a higher rate and non athletic and athletic based on consumer trends based on recent history.
And new fashion that has emerged in the non athletic side of the business.
Okay and then just.
What's the timing of the new store openings. This year, how should we plan for that and do you expect to close any stores.
No as Mark said in our prepared remarks that we're done with our store closing program.
To improve the store profitability with.
With all stores on an ongoing basis cash flow positive.
That we're very pleased and I think there is quite a success and looking out this year, we're not anticipating closing stores and including 23 right now we don't have any visibility on closing of stores.
On the openings this year.
We expect we just opened one for Schuh station. So we'll have one in Q1.
And then the rest of them going to be in.
<unk>.
Might have a store or two in Q3, but really it's going to be the Q4, where the stores are open.
Okay.
And then finally in terms of.
Vendor mix between shoe Carnival and <unk> station.
Next some differences there.
What are the opportunities to.
And some of the stronger shoe carnival brand's tissue expansion and vice versa, when would that opportunity play out.
Sure sure Jim we do see some synergies between the two the.
The two businesses and we plan to use the.
Power of shoe Carnival will help leverage.
<unk> some of the purchasing for schuh station where appropriate.
But as we have seen as we anticipated in this business and it certainly has come to fruition for the short time, we've operated them. They have a slight delay of a different consumer and the consumer is really more I would say targeted at what a department store consumer should be.
Our department store consumer is based.
Based on the type of products they sell based on the categories that.
Drive their business, so while we see some synergies between the two and us being able to leverage the strength of shoe carnival purchasing power. There are some distinct differences between the two businesses.
Not to say that to that.
With vendor support we might try a few things, but but the assortments.
Had the distinct differences targeted.
<unk> targeted a distinct customer would continue that.
Okay, great. Thank you.
Okay.
Our next question is from Mitch <unk> with Seaport. Your line is open.
Yes. Thanks, I just have a couple of quick follow ups.
On the on the Remodels I know youre early in the process, but could you maybe speak to the lift that youre seeing.
As you remodel the stores.
Whether it's productivity or margins or whatever metrics you can speak of.
We're seeing strong consumer feedback conversion is exceeding our expectations.
Comps are very strong to be honest, it's hard to unpack within the strong growth, we had a 23% in the fourth quarter of different elements.
Anecdotally, it's driving all of those core metrics right way.
Most importantly, the profitability and contribution per square foot are ahead of our expectations.
Okay, Great and then and then Carl.
You've spoken to the strength of non athletic could you remind us kind of when that really started to kick in.
And how you think about.
The first half of this year, particularly around around sandals I don't recall, how strong that business was for you last year I know that that can revolve around a lot of occasions, whether it's sort of Easter mother's day graduation things like that I'm kind of curious if you feel like there is an opportunity there versus last year.
Sure Mitch we saw a change to more special occasion dress up go out kind of footwear, starting mid April last year.
Fortunately, we were very well positioned with inventory.
And we're able to take advantage of that.
For the majority of the second quarter now that inventory got depleted.
And we have been aggressively chasing that so I do see that opportunity.
First quarter of this year being very strong.
Quarter as more social locations graduations weddings, those things are happening continuing through and I see great opportunity in.
Second half of the year as we will be in a much better inventory position.
Okay, great. Thanks again.
Okay.
Our next question is from Sam Poser with Williams trading your line is open.
Yes.
Thank you for taking my follow up eight two things one where do you expect.
The store the shoe station stores when Youre looking at markets are you looking at back selling are you looking at new markets.
Can you give us some color there.
Yes.
Amy.
Grow rapidly in the southeast market, where starting first with the strategic stronghold the shoe station as in that Alabama, Mississippi, Georgia, Florida, Louisiana region, and the lion's share of our near term growth will be.
Bringing the brand to the consumers, who already know and love them, but don't have access.
From there at once we felt that and we have.
Okay expanding further.
But.
The southeast market remains the focus of these growth numbers, we've talked about in the near term.
Thanks Carl.
Just wanted to make sure that you define athletic a little differently than some other retailers do.
So can you provide a little color as to.
What does and does not.
Work into your athletic.
This is because there are certain brands and so on that I know other people categorized as athletic can you die.
I'll say this.
And then around where we categorize it.
The numbers I quoted you.
For the total brand.
Not necessarily what category, we put that particular brand then.
And we define athletic footwear as well.
Brand you could do a sport in.
Not not a brand that is purely a fashion internet.
So right. So so for instance, the Nike is the Asics Brooks.
Adidas Reebok those are all athletic.
Correct.
The the Skechers.
It's not bands in cloud versus or is that the right way to think about it scheduled as of yet although they do have some but in general yes.
Okay, just wanted because because other people do categories Skechers shoes in the athletic.
Put it outside of it.
As well as other brands other.
Sam I would say the influent spread.
I would say with that brand and that brand covers.
Every bit in every category, we have as a company.
Necessities to Sandoz to Atlantic to manage women that brand is scattered throughout the entire building and when I look at that brand I hope we look at the piece.
Of the Atlantic that fits into athletic.
Gotcha, Okay. Thanks, very much continued success.
Thanks Sam.
We have no further questions at this time I'll turn the call back to the presenters for any closing remarks.
Thank you all for joining the shoe carnival today.
<unk> momentum is incredibly strong and we are excited to put up another record year as we.
At forward throughout the year. Thank you all.
Ladies and gentlemen, this concludes today's conference call. Thank you for participating and you may now disconnect.