Q1 2022 Shoe Carnival Inc Earnings Call
Good morning, and welcome to shoe Carnival's first quarter 2022 earnings Conference call Today's conference is being recorded.
It's also being broadcast via webcast.
Any reproduction or rebroadcast of any portion of this call is expressly prohibited.
Managements remarks may contain forward looking statements that involve a number of risk factors. These risk factors could cause the companys actual results to be materially different from those projected in such statements.
Forward looking statements should also be considered in conjunction with the discussion of risk factors included in the company's SEC filings and today's earnings press release.
Investors are cautioned not to place undue reliance on these forward looking statements, which speak only as of today's date.
The company disclaims any obligation to update any of the risk factors or to publicly announce any revisions to the forward looking statements discussed on today's conference call or contained in todays press release to reflect future events or developments.
I'll now turn the conference over to you Mr. Mark <unk>, President and CEO of shoe Carnival for opening remarks.
Mr. Burton you may begin.
Good morning, and welcome to shoe Carnivals first quarter 2022 earnings Conference call. Joining me on today's call is Kerry Jackson, Chief financial and administrative officer.
I'm encouraged to share that our customers return to a more normal shopping pattern during Q1 of 2020.
Footwear category trends and customer behavior closely resembled the first quarter of 2019 before the pandemic began.
During this quarter, we gained valuable insights into how our customers with chop for footwear without massive government stimulus distributions during 2021 and without the retail store closures from the pandemic 2020.
Yeah.
I'll be comparing results versus Q1 2019 throughout my speech as we see it as the most relevant and normalized quarterly benchmark since the pandemic began.
Three key learnings emerged for shoe Carnival.
Our strategies to double our profit generation model compared to the levels before the pandemic have worked.
Second market share growth from new customer acquisition and loyalty enhancements continues to advance our plans to become a multibillion dollar retailer.
Third customers are highly engaged with the dress casual sandals product categories, demonstrating a strong return to pre pandemic lifestyle and trends.
More specifically profit for the first quarter of 2022 significantly exceeded expectations.
Earnings per share were <unk> 95.
Achieving growth of 107% versus Q1 2019 results were.
Driven by double digit operating income and net sales growth of 25, 1%.
This marks the fifth consecutive quarter of growing SaaS by over 20% versus 2019.
Further the 2022 results highlight the staying power of the customer growth achieved.
Thrilled to share that we surpassed 109 million loyal customers at the end of Q1, which is up over 10% from last year and over 25% from 2019.
During the first quarter of 2021, the government distributed over $400 billion in consumers' stimulus contributing to shoe carnival growth of over 120% versus the prior year.
As included in our 2020 to annual guidance Q1 sales and EPS for planned lower than the prior year. However.
However, our EPS over delivery versus plan in Q1 reinforces our confidence for the remainder of the year.
As a result of the strong start Tonight, we are reiterating our sales guidance to achieve net sales growth of four 7% on top of the 36% annual growth achieved last year.
Additionally, we are raising our EPS guidance range to $3 95.
The $4 15.
Combined these generate a return on beginning equity between 24% and 26% for our shareholders.
We faced inflationary and supply chain headwinds throughout the quarter, yet our team of Stephen merchants continue to navigate the complexities with excellence.
The team has partnered with our strategic vendors to ensure a solid inventory position and ultimately strengthen our delivery against our customer expectations.
Our inventory positioning stores are set up well to capture rapid growth in non athletic seasonal products dress and casual categories. We.
We started seeing these categories reemerge as growth trends last year and the team bought 2020.
For the consumer to return to more historic splits between athletic and non athletic categories.
During Q1, we saw that shift happen with an approximately 600 basis points shift from athletics back to non athletics for the total Corporation.
This returns our category mix back to our normal split of approximately 50, 50 athletic and non athletic.
Our balanced business model gives shoe carnival significant advantages dependent rapidly as customer trends shift like they did over the past three years.
Despite the supply chain challenges globally and the backup of goods that supports our inventory per door is up approximately 20% versus last year and versus 2019.
We're positioned to win that back to school season with these inventory levels.
We will discuss the supply chain and inventory positions further shortly.
Overall enthusiasm to rapidly grow sales and profits permeate through the organization.
We are consistently executing on our core strategic priorities, which I will now provide a brief update on <unk>.
Number one delivering the most modern store fleet and shopping experience.
Our bricks first retailer mindset insurance, we constantly re imagine our store design, our shopping experience and customer service processes.
Total fleet modernization plan is well underway and the new store design and enhanced shopping experience has generated exceptional customer response.
As shared earlier this year, we have accelerated investments to complete the program faster.
Today, 31% of the fleet modernization has been completed.
We're 50% will be complete by the summer of 2023 and the full fleet plan will be completed by the end of fiscal 2024.
One of the major advantages of the new design is to create distinct brand experiences and present customers with shop in shop destinations and.
An example of this is our athletic shop in shops, which provide a large open easy to shop environment with the nation's most sought after athletic brands for the entire family.
Another example is our seasonal pop up shops that are focused on the hottest casual intangibles brands currently are.
Our new design is full of digital elements that allow us to pivot rapidly from one season to the next to the hottest new product or to market. The latest new brand in conjunction with our strategic vendor partners.
Number two our advanced CRM analytics and digital marketing.
Understanding the footwear customer best and how to communicate effectively with them the top strategic priority and core driver of our profit model.
We elevated our capabilities in this space to accelerate profitable growth and to pinpoint desirable real estate.
<unk> Carnival customer base expanded over 10%. This last 12 months and is now over 29 million customers that we can effectively ADH, but.
Investments made in technology and team capabilities F transformed our promotional model into a highly profitable personalized digital first approach. This is structurally shifted our gross margin levels upward by approximately 600 basis points during Q1 2022.
Versus the previous highest pre pandemic.
Combined with our increased scale the margin growth results in a sustainable operating income level that is double digit in EPS that is more than twice the levels generated historically.
This in turn creates strong operating cash flow characteristics to invest in accelerating future growth.
Number three leading store productivity.
We completed our multi year store productivity improvement plan this past year.
The strategic plan and eliminated all underperforming stores and those that were not positioned well to reach our quarter customer target.
All comparable stores across the fleet generated positive cash flow and profit contribution last year.
This past year, our sales per square foot also surpassed $300 for the first time compared to historically delivering $225 to $250 range.
This quarter, we continue to deliver over $300 per square foot and all comparable stores generated positive cash flow and profit contribution on a trailing 12 month basis.
Based on our guidance, we expect to end fiscal 2022, with a strong cash flow generation and top tier productivity.
Strategy number four rapidly expanding scale. These.
The existing fleet of highly productive modernization program is progressing quickly we have structurally more than doubled our ongoing earnings per share. We are now positioned to rapidly expand our scale profitably.
Turning to December of 2021, we completed the acquisition of Hu station, a leading footwear retailer in the staff. The second banner added a growth platform to expand store count across the southern markets.
We have smoothly completed the integration phase of the acquisition and during 2022 are building up the banners advanced CRM analytics and marketing capabilities.
We opened our first two station store since the acquisition this past quarter and sales have far exceeded our plans.
Another handful of shoes station, new stores have leases executed or near completion and many more new stores are following on the heels.
<unk> stations CRM and dotcom platforms are on track to go live ahead of plans and support our customers' holiday shopping this year.
We are on track to double the footprint and as sales of the shoe station banner in the next two to three fiscal years.
The shoe Carnival banner is also expanding store count and is moving into an accelerated growth mode in 2023.
We opened a new store in Morgantown, West, Virginia during Q1, and it also exceeded our sales plans and customer response.
I am bullish on sales growth and store count expansion for both banners and total company fleet will reach 400 stores this fiscal year and over 450 stores during fiscal 2024.
In closing, we see tremendous market share potential and a long runway for further store growth for our banners in the years ahead.
Our inventory position is ready for a big spring sandals season that we are now ready for the upcoming back to school season, and is well positioned for the customers returned to a more normal 50, 50 athletic and non athletic balanced between categories.
I'd like to thank our nearly 6000 team members, our customers and vendor partners for contributing to our many successes in Q1.
I would now like to turn the call over to Carrie and then we will open up for your questions.
Right.
Thank you Mark.
I'm excited to share with you some financial highlights.
Very successful first quarter and in doing so will help demonstrate the sustainability of the structural changes in our profitability profile and.
In my remarks, I will continue to compare our first quarter results with first quarter 2019.
But also we then comparisons to our record setting first quarter last year where appropriate.
Net sales in Q1 were $317 5 million.
This is the second highest first quarter sales results in our history.
Excluding last year's record Q1 performance. This was the highest Q1 sales results be any other Q1 by more than 20%.
An indicator of the strength of the quarter against the more typical first quarter 2019.
Total sales were up 25, 1% and comparable store sales were up 16, 8%.
Breaking this down further our brick and mortar comparable store sales were up nine 1% and E Commerce increased 154, 4%.
As Mark mentioned earlier, we plan during our annual guidance lower Q1 sales when compared to Q1 last year.
Against last year's stimulus enhanced Q1 total sales were down three 3% and comparable store sales declined 10 six.
6%.
These results were against a net sales increase of 122, 7% and a comparable store sales increase of 125, 8% in Q1 last year.
Our Q1 gross profit margin was 35, 5%.
This was the second highest quarterly margin in our history and was up 590 basis points over Q1 2019.
This increase was driven by a 680 basis point increase in our merchandise margin.
Really offset by a 90 basis point increase in buying distribution occupancy expense as a percentage of sales.
I guess last year's first quarter, our merchandize margin decreased 130 basis points and.
And buying distribution occupancy expense as a percentage of sales increased 280 basis points.
Due to current global supply chain issues and transitory inflation, we incurred in Q1, this year significantly higher transportation and fuel costs, which reduced our merchandise margin by 150 basis points in.
That increased our distribution costs by 190 basis points.
I'd like to point out excluding the unusual 150 basis points.
And fuel costs, our merchandise margin would have increased in Q1.
Furthermore, these additional costs decreased EPS in Q1 by 2009.
While we expect to incur higher transportation and fuel costs through the remainder of the year.
We feel the year over year increase will moderate in Q2 and beyond partly due to mitigation we have put in place.
SG&A expense in Q1, with $77 5 billion or 24, 4% of sales.
The increase in SG&A against Q1 last year was driven primarily by increased investment in advertising and store level wages.
Offset by lower incentive compensation expense.
Q1, operating income was $35 4 million or 11, 1% of sales.
This is in line with our expectations of annual double digit operating margins, which are more than double our historical run rate.
Net income for the first quarter of 2022.
Was $26 9 million or <unk> 95 in diluted earnings per share.
Once again this is the second highest Q1 diluted EPS only surpassed by Q1 last year.
However to put this in further context of the transformation of our profitability.
Earnings in Q1 by themselves would be the fourth highest annual earnings in our 43 year history.
We closed out the quarter with inventory of $345 million, which is up $76 4 million compared to the prior year.
22, 6% on a per store basis.
Approximately 40% of the increase was due to the addition of Hu station stores with the remaining increase due to the accelerated receipts of merchandise to help protect our store inventories against supply chain delays.
The acceleration of merchandise receipts has put us in a solid position for spring and should position us well for back to school.
We continue to have ample liquidity to fund our growth initiatives Mark outlined earlier.
At the end of Q1, we had total cash cash equivalents and marketable securities of $97 1 million and no outstanding debt.
During the quarter, we repurchased approximately 683000 shares of our stock at a cost of $25 million.
Currently have $29 $5 million remaining on our $50 million share repurchase program.
With cumulative sales results in line and diluted EPS ahead of our expectations, despite higher supply chain costs.
We are reiterating our sales guidance for fiscal 2022 of 4% to 7% growth and raising our diluted EPS guidance to $3 95.
Two $4 15.
From previous expectations of $3 80.
Two $4 10.
In closing this morning, we announced the continuation of financial results, which are significantly elevated from our pre pandemic profit levels.
We have confidence in the sustainability elevated earnings levels and.
We are better positioned financially than ever before to execute on our growth strategy.
Which combines organic store expansion and monetization on the one hand.
And our selective acquisition strategy on the other.
This concludes our financial review and now I'd like to open up the call for questions.
If you'd like to ask a question. Please press Star then one on your telephone keypad.
Our first question today is from Mitch <unk> with Seaport Research Your line is open.
Thank you I've got maybe a handful of questions. So Terry could you start.
You talked about the higher transportation and fuel costs.
I think if I add up the merch margin and BDO, it's about 300 or 340 basis point hit on the quarter.
You mentioned that you expect that to moderate through some mitigation strategies could you maybe just elaborate on that like what do you think that is.
Maybe in the second quarter or for the year, and then talk a little bit about the strategies that you're employing to bring that down and then I've got some other questions.
Well.
Mitch we are not going to get specifically into it because it's still a little bit of an unknown because we can't control the fuel cost.
We expect to see.
Diesel to be about the same.
Looking out so we would not expect to see much on net however on the transportation side, what we saw with <unk>.
Sure.
A shortage of availability to transport goods out of the ports because of the congestion that congestion is kind of slow.
Clearing out a little bit so we're seeing more favorable rates on transportation costs. That's why we think that we're going to be able to.
Bob.
Improve on that as the year goes along and.
We are working aggressively to lower those costs because that was quite a penalty in Q1 for us what we would see is that both of those.
That <unk> would not deleverage to that extent in Q2 and beyond as we did in Q1, we think that's going to be the high watermark.
Okay, what was the SKU station contribution in the quarter from <unk>.
Sales and EBIT perspective, if you have it.
We look at Schuh station as one of our.
Store growth.
It's a separate banner, we call them, but we're not going to break out the pieces between the two because we look at it as one enterprise.
<unk> customer base similar.
Issue based so it's going to be one company.
Okay, and then on the on the comparable store sales I think on a year over year basis downturn.
Six.
How does that breakout kind of traffic versus ticket I think your prior full year outlook was maybe sort of flattish. So I'm kind of curious how you think about that playing out for the balance of the year.
I missed its mark good morning.
As previously stated.
Confidence in our guidance with sales growing 4% to 7% for the year and importantly, now that we're past the Q1 stimulus and major headwinds.
We see us in a growth mode in that range, starting off this quarter and continuing to grow.
Sequential quarters, the rest of the year.
In terms of the diagnostics traffic has been in line with expectations.
During Q1, we saw lower conversion rates, which was driven primarily due to the $400 billion of stimulus consumers had available from mid March to the end of the quarter last year.
That made the conversion.
Record highs last year, we're very pleased with where conversion landed this year, but we would say that the less discretionary funds and the high inflation didn't slowdown in traffic, but have slowed down their ability to make multiple purchases.
The higher ticket purchases and the category this quarter.
Okay.
Okay, and then kind of to your point Mark.
On the accelerator.
When I look at the sales that kind of a run rate on a three year basis. I guess Q1 was up 25%. The sales guide on the year implies a three year sales growth with kind of mid <unk>, which is an acceleration from where you were in the first quarter is the confidence that you have.
And that largely due to better inventory position you are in today versus kind of what you were in going into the quarter or are there. Other things that are also contributing to what you would expect to be an acceleration of about three year sales growth rate.
It's multiple factors the largest is just the comp we had to go against for Q1.
And the stimulus again versus wonder if I'm talking about on a three year basis.
Yes on a three year basis, we captured significant share growth since 2019 or three years ago.
The consumer did not have this discretionary funds available in Q1 and the inflation as I said was a challenging headwind, we're seeing that already mitigate in the early part of this quarter and are very encouraged with the early trends. We're seeing in the first weeks of Q2, we're seeing the consumer now get into a more.
<unk> state and accelerated growth compared to 2019 to your question.
Q1 was truly an anomaly with the inflation shocks I think consumers were digesting.
We're seeing that and get into a more normal stage. In these first few weeks of Q2 and very pleased with the growth being able to deliver in line with the 4% to 7% guidance.
Okay.
Got it that's helpful. And then lastly, just on on on.
On sandals, it sounds like you're encouraged about sandals.
<unk>.
I guess I'm curious kind of how they performed in the quarter I think the weather wasn't necessarily ideal that your inventories for sandals were an ideal in the quarter and probably a lot of that has improved subsequent to the end of the quarter.
Can you just talk a little bit about that and then im good. Thank you.
Sure. Thanks, Ken I'm going to ask Carl <unk>, our chief merchandising officer to elaborate on that one.
Hi, Mitch how are you doing.
Right.
In the first quarter started slow the weather was unseasonably cool, especially in the northern middle to northern part of the country.
Late first quarter as weather started changing we saw a significant increase in channel performance ad.
As the warm weather hit the first two weeks of May we're seeing customers' acceptance of our sandal offering very very strong we're well positioned from an inventory standpoint, and we look to have a <unk>.
Strong second quarter in the seasonal categories.
Great Alright, thanks, guys I appreciate all the color.
Our next question is from Sam Poser with Williams trading your line is open.
Good morning, everybody I just have a few questions.
One.
I'll get to the good stuff in the stack, but you mentioned on the fourth quarter call that you had with your same day delivery that brought our door dash to do some of that I Wonder Mark if you could give us a little update.
On some of these.
Improved.
Customer facing initiatives, including that one.
Good morning, Sam Thanks for joining us today, we're very pleased with the work our team is doing to make our shopping experience easier and faster as well as cost effective for them.
We are building in enhanced.
Systems throughout our omnichannel, including upgrading our entire backend system to a leading salesforce platform and that has just gone live in the last quarter, we couldnt be more excited with what this new platform is going to allow us to do Additionally, beyond specifics that we're very pleased with the early days of.
Our.
Same day delivery services and partnerships are customers, taking advantage of it and it gives them that one more option of whatever is easiest for them. Most most we find shoe carnival shoppers still loved the experience in store and want to come into the store, but many are taking this opportunity.
As well so we're very pleased with the capabilities.
Thanks.
And then.
Historically, you've given us the breakdown by category Kids Kids.
Adult athletic women men.
I Wonder if you could provide.
Got it.
That.
Data.
On a versus last year and versus 19.
Thanks, Tim it's Carl.
<unk> 19.
Like we said in the earlier remarks, the non athletic categories continue to.
Accelerate so womens non athletic was up in the 30% range really driven by dress and sport.
Men's non athletic was up in the mid <unk>.
Kids was up in the low thirties, and athletics were down very slightly singles versus 19.
Versus 21, the non athletic categories continue to outperform the Atlantic categories.
Versus 21 in the stimulus money from a year ago.
That has brought us back to our 50 50 breakdown of athletic versus non athletic.
Can you give us.
As you just did for last year.
Gabe for 19.
Sure.
Let me pull that.
Womens womens non athletic was up mid singles.
Mens non athletic was up low singles.
Children's was.
Children's total.
<unk> was down.
In the high teens.
Adult athletic.
Actually yes, adult athletic was down right at 20%.
And that takes us.
So pre pandemic sort of breakdown of our business.
And with the athlete.
<unk> business.
How much of that do you think was just the all the stimulus from last year versus.
Delivery timing this year, because we're hearing a lot of the athletic guys of them Mike.
Late late late late late.
And so I'm, just wondering what youre seeing there and how youre thinking about that for the balance of the year.
Hey.
A big part of when stimulus monies in the marketplace, whether it's tax refunds or stimulus money.
It really accelerates our athletic business significantly.
With the amount of money that was in the market last year, and obviously had that great effect.
We're now back to where we were at <unk> 19, which is which is.
That 50, 50 breakdown athletic Dod Atlantic, which is frankly, the strength of our of our.
Formula.
Not going to not going to ignore the fact that there are there are issues with deliveries coming out of.
Let's just say goods manufactured in Vietnam.
But we have been very aggressive and we.
We do continue we do believe we're going to tend to see some slippage there, but we have been able to manage through it.
For almost two years, so we're confident we'll get what we need.
Thanks, and then lastly, when do you when do you anticipate.
The seeing the benefit of <unk>.
Our largest than there is decision too.
Eliminate.
Quite a bit of distribution are you starting to see some of that now or is that something that.
Do you anticipate seeing some of the benefit from that.
Well broadly speaking, we have been seeing growth in our athletic market share.
Multiple years now.
And we're confident with the lay of the land that we've got the right strategic partners.
<unk> diverse set and we're going to continue to grow market share.
We expect that continues to accelerate as we get into back to school and holiday season. This year based on our relationships across the slate of the world's best brands.
Alright, I'm, sorry, one more thing with with Schuh station you originally had guided to station to do about $100 million revenue and at a 10% op margin.
Is that.
Has anything changed within.
That.
Number within your guidance.
Four.
Can you just give us any color as to what youre seeing there by getting up earlier on some of the.
On the CRM and with Schuh station Dot com.
<unk>.
Essentially facilitate more revenue.
Anything you can give us there.
Sure and again this is mark we're very pleased with the early results.
We're confident in delivering that early guidance and if there's an opportunity with integrations going so smoothly with our lease is starting to get sign that outperforming and our dotcom coming online for the holiday there is an opportunity for us.
Start to capture some of that growth towards the end of this year importantly, we think we're set up to grow rapidly as we get into the next fiscal year and have all those pieces in place.
To reiterate we're very confident in delivering our original expectations and have an opportunity to beat.
And I know you said you were going to open like it sounded like around seven stores seven or eight stores this year.
And then and then accelerate from there.
Great.
Did I get that right from prior call.
We're committed to get to 400, so thats roughly right. We're working hard to get above seven is going to come down to just real estate availability if that happens towards Q4 or in Q1, but we're trying to make it real clear are $4 50 is the number of both surpassed as we get into fiscal 2024, we're going as quick as we can.
We're finding very attractive real estate.
<unk>, how fast we can close those deals, but yes, we will accelerate in 2020 right into double digit store growth and accelerated Gan.
In the following year, making a minimum of 450 stores for the enterprise at the end of fiscal 2024.
Okay, great well. Thank you so much and continued success.
Thank you Sam.
Our next question is from Jim Chartier with <unk> Crespi Hardt. Your line is open.
Good morning, Thanks for taking my questions.
First I believe last quarter, you said you expected first half sales to be flat to up 2%.
I just want to see if youre still comfortable with that expectation.
We are we're really happy to get past the compare Q1, and we are expecting comp increases in Q2, three and four as we had originally expected.
Like we said before is that we expect the Q2 comp to be.
On the lower side of the average for the remainder of the year.
Because of some residual still benefits of the stimulus from last year, but we're still in line with our expectations there.
Great and then your SG&A came in a little bit higher than I would've expected given that you are comping against the big incentive comp accrual last year.
Were there any incremental costs to integrate hu station in first quarter.
And then you mentioned higher advertising expense.
What's kind of the expected benefit from that expense and what's the plan for advertising for the rest of the year.
Yes.
Okay.
Our SG&A came in line with our expectations, we're needing to invest in our store level wages.
As we've done before too.
So we have a good positive store experience for our customers come in.
And the other one was advertising utilizing our digital CRM analytics.
To drive that.
Net spend to be more effective and drive that margin of sales. So we are in line as the unusual thing that within our SG&A as an.
Offsetting those loopnet was up.
More.
Deneve compensation compared to last year, because if you remember last year, we had such a breakout first quarter it was higher than the average typically.
Good morning, Jim its mark one builds on that.
We're very proud to share that our cost structure now includes all shoe carnival fulltime employees are at $15 or above and we've been working many years.
<unk>, what we believe is the.
Strongest employee base awful compensated at a strong living wage.
This quarter, we have achieved that and we have that built into our guidance for the annual year, which we've just raised.
That's great.
And then the share repurchases.
Much more aggressive than kind of historical.
Is there been a change to your approach to share repurchases and how do you think about that going forward.
Jim we typically are optimistic or opportunistic on that and we saw our stock under pressure in the first quarter and utilize that to buy back some shares a little more aggressively.
Great and then last question any areas, where inventories constraining sales.
Okay.
Hi, Jim This is Carl.
Not that we see at this point.
Inventory.
Inventory for the shoot on the shoe carnival comp basis versus 19 is up.
Per door of about 8% and our sales are up.
Just over <unk> at Cameron reported so we think that's a really good ratio, making good efficient use of the inventory that we have.
We're well positioned going into second quarter for Ari as the weather warmed up for a great.
Seasonal selling season.
Ferring for back to school.
Great Best of luck for the rest of the year.
Again, Please press star one if you'd like to ask a question. The next question is from Mitch comments with Seaport Research. Your line is open.
Yes, I just have a couple of quick follow ups one just on the on the on the gross margin. So you've got this outsized growth.
Right now of non athletic versus athletic are there any margin implications to that.
In terms of that penetration going up.
Yes, Mitch it's Carl that typically typically the non athletic areas run a slightly higher margin than the Atlantic areas.
Do we have that built into our plan for the balance of the year.
Okay, and then and then Carl it sounds like you guys are particularly bullish on casual.
Casual dress seasonal.
Kind of based on what the current reads are there and what your thoughts are for maybe the balance of the year I am sure you have a pretty good sense as to maybe how some of your competition is positioned in those categories do you feel like there's an opportunity to pick up market share in those areas maybe over the balance of the year, just kind of given the commitments you've made to those those.
Areas versus.
Maybe a lack of commitment by some of your competition.
Well, Mitch I wanted to talk about our competition, but we started seeing.
The re <unk>.
<unk> flow of Av.
The category to the non athletic categories, frankly April of 2021, and it really picked up where we were headed in 2019, we took that as a as an alarm or an opportunity I guess I should say to go after those categories. We continue that throughout.
The balance of 'twenty, one and aggressively has ourself in a position for 'twenty two we see that continuing and we believe we've taken market share in those areas and we believe we're ahead of the curve on that.
Okay. That's helpful. Thanks again good luck.
Yes.
The next question is from Sam Poser with Williams trading your line is open.
Kerry I was wondering.
Can you.
Give us some more.
Some more data on your loyalty members as to how.
To how well they are how much business you are getting from them.
And.
You talked about share growth.
Broad smart, but where do you see.
This share growth.
Coming from and then lastly, probably for Carl.
Built into your plans to take into a capsule mix of product.
The mix of product.
Do you foresee the promotional environment within your plan, let's say versus 19, I mean last year was.
Almost perfectly so versus 19, how do you foresee that.
Sure Sam it's Marc I'll take that one.
We talked through our advanced CRM capabilities is continues to grow faster than we expected as reported total membership grew over 10% versus the prior year, we're very encouraged to see that sustained growth during Q1.
That puts both our total numbers as well as our gold members. Our most valuable customers were up both up approximately 10%.
For the end of Q1 for the trailing 12 and as I said over 29 million members hitting a new watermark. That's so important because now with that enhanced technology, we can engage with that consumer via effective cost effective digital vehicles and personalize the messages and all.
Offers.
Ultimately that strength is parlaying into that nearly 600 basis points of enhanced margin that we talk about that's where the real excitement is effectively efficiently promoting our best products, our best brand without having to dilute the profit per pair or engagement.
We couldnt be more encouraged by where we're going there. There is a lot more upside that we are a software where we use the baseball game. We're still early innings, we absolutely know how to play the game, we have all the tools, but there are many many more innings of growth. We can derive from this in the years ahead.
But what I also wanted to sales there what percent of your sales are coming from those loyalty members.
And and and.
And how does that.
How does that change, let's say now versus last year and now versus 19.
Yes, we're still hovering between two thirds and low seventy's on any given quarter, Sam we still have a lot of runway and believe the upside potential is.
Years ahead to get that in the high <unk> or 80% of our revenue, but truly climb for best in class. We've completed all of the investment phases as I said upgrading so we believe the best platform available for what we need.
And we think that over the years ahead, we can continue to gain that efficiency for cost and effectiveness of reach and move from that range I just said.
Significantly up year over year.
Thank you.
Thank you.
We have no further questions at this time I will turn it back to the presenters for any closing remarks.
Thank you all for joining us in our Q1 call and we look forward to talking to you again next quarter have a great day.
Ladies and gentlemen, this concludes today's conference call and webcast. Thank you for participating you may now disconnect.
Okay.
[music].