Q3 2024 Hibbett Inc Earnings Call

Speaker 1: your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Gavin Bell, Vice President Investor Relations. Thank you, Mr. Bell. You may begin.

Minder. This conference is being recorded it is now my pleasure to introduce your host Gavin Bell Vice President Investor Relations. Thank you. Mr. Behler you may begin.

Speaker 2: Thank you and good morning please note that we prepared a slide deck that we will refer to during our prepared remarks.

Thank you and good morning.

Please note that we've prepared a slide deck that we will refer to during our prepared remarks, a slide deck is available on <unk> dot com via the Investor Relations link it sounds at the bottom of the homepage bored investors thought HIPAA dot com under the news and events section.

Speaker 2: The slide deck is available on Hibit.com via the investor relations link down at the bottom of the homepage or at investors.Hibit.com and under the news and events section. These materials may help you follow along.

These materials May help you follow along with our discussion this morning.

Speaker 2: Before we begin, I'd like to remind everyone that some of management's comments during this conference call are forward-looking statements. These statements, which reflect the company's current views with respect to future events and financial performance, are made in reliance on the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, and are subject to uncertainties and risks.

Before we begin I'd like to remind everyone that some of management's comments. During this conference call are forward looking statements. These statements, which reflect the company's current views with respect to future events and financial performance are Megan reliance on the safe Harbor provisions of the private Securities Litigation Reform Act of 1995 and are subject to uncertainties.

Risks it should be noted that the company's future results may differ materially from those anticipated and discussed in the forward looking statements.

Speaker 2: It should be noted that the company's future results may differ materially from those anticipated and discussed in the forward-looking statement.

Speaker 2: Some of the factors could cause or contribute to such differences have been described in the news release issued this morning and are noted on slide two of the earnings presentation and the company's annual report on Form 10-K and other filings with the Securities Exchange Commission. We refer you to those sources for more information. Also, to the extent non-GAAP financial measures are discussed on the call, you may find a reconciliation to the most directly comparable GAAP measures on our website.

Some of the factors could cause or contribute to such differences have been described in the news release issued this morning and are noted on slide two of the earnings presentation and the company's annual report on Form 10-K, and other filings with the Securities and Exchange Commission.

We refer you to those sources for more information also to the extent non-GAAP financial measures are discussed on the call you may find a reconciliation to the most directly comparable GAAP measures on our website lastly, I would like to point out that management's remarks. During the conference call are based on information and understandings believed accurate as of today's date November 21 2023.

Speaker 2: Lastly, I'd like to point out that management's remarks during the conference call are based on information and understandings believed accurate as of today's date, November 21st, 2023. Because of the time-sensitive nature of this information, it is the policy of HBIT to limit the archived replay of this conference call webcast to a period of 30 days.

Because of the time sensitive nature of this information. It is the policy of hibbett to limit the archived replay of this conference call webcast to period of 30 days.

Speaker 2: Participants on this call are Mike Longo, President and Chief Executive Officer, Jared Briskin, Executive Vice President of Merchandising, Bob Voelke, Senior Vice President and Chief Financial Officer, Bill Quinn, Senior Vice President of Marketing and Digital, and Ben Knighton, Senior Vice President.

Participants on this call are Mike Longo, President and Chief Executive Officer, Jared Briskin Executive Vice President merchandising, Bob Bulky Senior Vice President and Chief Financial Officer, Bill Quinn Senior Vice President of marketing and digital and then senior Vice President of operations I will now turn the call over to Mike long.

Speaker 2: I'll now turn the call over to Mike Longo. Good morning and welcome to the Hibbett CityGear Q3 earnings call. For those of you following along in the slides, I'm on slide three entitled Overview.

And welcome to the Hibbett sitting here Q3 earnings call for those of you following along on the slides I'm on slide three entitled overview.

Speaker 2: We're very pleased to report a strong financial and operating performance for the third quarter of fiscal 24. The team did an outstanding job with consistent execution of our strategy as we continue to win market share. While the retail environment remains challenging, as consumers are being more selective in their discretionary spending, we've worked very hard to offer a compelling product mix that meets this demand.

We're very pleased to report a strong financial and operating performance for the third quarter of fiscal 'twenty four for team did an outstanding job with consistent execution of our strategy as we continue to win market share while the retail environment remains challenging as consumers are being more selective in their discretionary spending we've worked very hard to offer compelling.

Product mix that meets this demand.

Speaker 2: Additionally, our superior customer service, a best in class omni-channel shopping experience, strong vendor relationships, and store placement in underserved markets are distinct competitive advantages that allowed us to continue to gain market share.

Additionally, our superior customer service, our best in class Omnichannel shopping experience strong vendor relationships in store placement and underserved markets are distinct competitive advantages that allowed us to continue to gain market share.

Speaker 2: Our sales were supported by a strong back-to-school season, which occurred in the first month of the third quarter. Footwear sales continue to be the key driver of our sales, especially for our premium brand.

Our sales were were supported by a strong back to school season, which occurred in the first month of the third quarter footwear sales continued to be the key driver of our sales, especially for premium brands. We are fortunate to have strong vendor relationships that support our ability to deliver the latest products that appeal to our fashion <unk>.

Speaker 2: We are fortunate to have strong vendor relationships that support our ability to deliver the latest products that appeal to our fashion conscious consumers.

As consumers during the quarter, we benefited from a more regular schedule of new product launches, which received a very positive response from our brand loyal customers.

Speaker 2: During the quarter, we've benefited from a more regular schedule of new product launches, which received a very positive response from our brand loyal customers.

Speaker 2: As announced earlier in the quarter, we launched our Nike Connected Partnership, which connects Hibbitt and Nike's loyalty programs. We're very excited about this new benefit for our customers and what it means for our joint businesses. Bill will provide some additional detail in his remarks.

As announced earlier in the quarter, we launched our Nike connected partnership, which connects hibbett and nike's loyalty programs.

We're excited about this new benefit for our customers, but what it means for our joint businesses Bill will provide some additional detail in his remarks.

Speaker 2: In addition to our solid sales performance, we're pleased with the progress we've made with respect to improved expense management and disciplined inventory controls. Bob will cover this in greater detail in his report.

In addition to our solid sales performance. We're pleased with the progress we've made with respect to improved expense management and disciplined inventory controls Bob will cover this in greater detail in his remarks, we also continue to make the necessary investments in our business to enhance the customer experience within our stores and our.

Speaker 2: We also continue to make the necessary investments in our business to enhance the customer experience, both in our stores and our expanding omni-channel platform. We believe our store expansion strategy will be a key driver to our continued growth, and we are still on track to meet our goal of adding approximately 40 net new stores this year.

Sandy Omnichannel platform.

I'll leave our store expansion strategy will be a key driver to our continued growth and we are still on track to meet our goal of that I mean, you're adding approximately 40 net new stores this year.

Speaker 2: We're pleased with the trends in our business and look forward to the fourth quarter and a successful holiday sales season in line with our expectations.

We're pleased with the trends in our business and look forward to the fourth quarter and a successful holiday sales season in line with our expectations. We're excited about additional new product launches around the holidays, which will boost sales and we're confident we have sufficient inventory to support these events and our premium footwear sales.

Speaker 2: We're excited about additional new product launches around the holidays, which will boost sales, and we're confident we have sufficient inventory to support these events and our premium footwear sales.

Speaker 2: I would like to emphasize in short, we're investing in our business model for the long term and continue to take market share.

I would like to emphasize in short we are investing in our business model for the long term and continue to take market share.

Speaker 2: Before turning the call over to Jared, I would like to thank our 11,000 team members across the organization for their dedication and hard work and support to our customers in a relatively challenging environment.

Before turning the call over to Jared I would like to thank our 11000 team members across the organization for their dedication and hard work and support to our customers in a relatively challenging environment.

Speaker 3: We have a passionate and dedicated workforce operating more than 1,150 stores, our omni-channel platform, our logistics facilities, and our store support center. They distinguish our brand in the marketplace with outstanding support that continues to drive customer loyalty and extends our market reach. Thank you. I'll now turn the call over to Jared. Thank you, Mike. Good morning. Please turn to slide four entitled Merchandising. The third quarter opened with a strong conclusion.

Have a passionate and dedicated workforce operating more than 1100 50 stores, our omnichannel platform, our logistics facilities and our store support center.

They distinguish our brand in the marketplace with outstanding support that continues to drive customer loyalty and extends our market reach thank you I'll now turn the call over to Jerry. Thank you Mike. Good morning, Please turn to slide four entitled merchandising.

The third quarter open with a strong conclusion to the back to school season footwear remained our strongest category during the quarter with a low single digit comp sales increase results in footwear was driven by strength in basketball lifestyle running silhouettes are favorable launch calendar also enabled these positive results apparel and team sports wear.

Speaker 3: But we're remained our strongest category during the quarter with a low single digit comp sales

Speaker 3: Results in footwear were driven by strength and basketball, lifestyle, and running silhouettes. A favorable launch calendar also enabled these positive.

Speaker 3: Apparel and team sports were both negative for the quarter down in the low teens. Feasible categories were strong during the back to school season, but cold in the latter part of the quarter due to the warm and dry weather pattern.

Negative for the quarter down in the low teens seasonal categories were strong during the back to school season, but cool in the latter part of the quarter due to the warm and dry weather patterns apparel also continues to be affected by promotional activity due to elevated inventory levels in the market.

Speaker 3: Apparel also continues to be affected by promotional activity due to elevated inventory levels in the market.

Speaker 3: While apparel was a challenge overall, socks and backpacks were strong performers in the back-to-school period.

While apparel was a challenge overall socks and backpacks were strong performers in the back to school period.

Speaker 3: specific to footwear and apparel, the men's and kids' business was down low single digits, while women's was positive mid-single digits.

Specific to footwear, and apparel and men's and kid's business was down low single digits. While women's was positive mid single digits men's and kids were both down low single digits driven by a low teens decrease in apparel footwear results in both men's and kids were positive low single digits womens was up mid single.

Speaker 3: Men's and kids were both down low single digits, driven by a low teen decrease in apparel. Footwear results in both men's and kids were positive low single digits. Women's was up mid-single digits, driven by a mid-teens increase in footwear, offset by weak apparel results.

It's driven by a mid teens increase in footwear offset by weak apparel results.

Speaker 3: We continue to make progress on reducing our inventory. Inventory levels declined slightly in the third quarter versus the second quarter, as well as year over year. We continue to expect a promotional environment through the fourth quarter. Our targeted promotional efforts, as well as support from our key brand partners, will help us achieve our goals for inventory reduction.

We continue to make progress on reducing our inventory inventory levels declined slightly in the third quarter versus the second quarter as well as year over year. We continue to expect the promotional environment through the fourth quarter, our targeted promotional efforts as well as support from our key brand partners will help us achieve our goals for.

Tori reduction.

Speaker 3: Our expectations remain unchanged, and we are on track to deliver a mid-teens year-over-year inventory decline at year-end. And I'll hand the call over to Bob to cover our financial results.

Our expectations remain unchanged, but we are on track to deliver a mid teens year over year inventory decline at year end I'll now hand, the call over to Bob to cover our financial results.

Speaker 2: Thank you, Jared and good morning. Please refer to slide 5 entitled Q3 fiscal 24 results. As a reminder, all financial results are important on a consolidated basis that includes both inhibit and city year brand.

Thank you Jared and good morning, please refer to slide five entitled Q3 fiscal 'twenty four results as a reminder, all financial results are reported on a consolidated basis that includes both the hibbett and city gear brands.

Speaker 4: Total net sales for the third quarter of fiscal 24 decreased 0.3% to 431.9 million from 433.2 million in the third quarter of fiscal 23. Overall comp sales decreased 2.7% versus the prior year's third quarter. Brick and mortar comp sales declined 5.4% compared to the prior year's third quarter, while e-commerce sales increased 12.6% compared to the same period of fiscal 23.

Total net sales for the third quarter of fiscal 2004 decreased <unk>, 3% to $431 9 million from $433 2 million in the third quarter of fiscal 'twenty three.

Overall comp sales decreased two 7% versus the prior year third quarter.

Brick and mortar comp sales declined five 4% compared to the prior year's third quarter, while ecommerce sales increased 12, 6% compared to the same period of fiscal 'twenty three.

Speaker 4: E-commerce sales accounted for 17% of net sales during the current quarter, compared to 15% in the prior year, third quarter.

E Commerce sales accounted for 17% of net sales during the current quarter compared to 15% in the prior year third quarter.

Speaker 4: Gross margin was 33.9% of net sales for the 3rd quarter fiscal 24 compared with 34.3% in the 3rd quarter of last year. This approximate 40 basis point decline was driven primarily by lower average product margin, which is approximately 130 basis points. Below the same period last year, it's unfavorable product margin performance is attributed to higher promotional activity across both footwear and apparel category.

<unk> margin was 33, 9% of net sales for the third quarter of fiscal 'twenty four compared with 34, 3% in the third quarter of last year. This approximate 40 basis point decline was driven primarily by lower average product margin, which was approximately 130 basis points below the same period last year. This unfavorable product margin performances.

Attributed to higher promotional activity across both footwear and apparel categories.

Speaker 4: Higher store occupancy costs mainly due to deleverage from the slightly lower sales volume accounted for approximately 40 basis points of the overall decline in gross margin versus the prior year period.

Store occupancy costs, mainly due to deleverage from the slightly lower sales volume accounted for approximately 40 basis points of the overall decline in gross margin versus the prior year period.

Speaker 4: Partially off studying the unfavorable product margin occupancy impacts was improvement in freight shipping shrink and logistics costs as a percent of sales.

Offsetting the unfavorable product margin occupancy impacts was an improvement in freight shipping shrink and logistics costs as a percent of sales.

Speaker 4: SG&A expenses were 23% of net sales for the third quarter of fiscal 24 compared to 23.9% of net sales for the third quarter of last year. This approximate 90 basis point decrease is primarily the result of our continued focus on expense management, including improved efficiency of store labor and strategic reductions in discretionary expense categories, such as professional fees and advertising. These initiatives have more than offset the impacts of inflation on wages, goods, and services and de-leveraged from slightly lower sales volume.

SG&A expenses were 23% of net sales for the third quarter of fiscal 'twenty four compared with 23, 9% of net sales for the third quarter of last year. This approximate 90 basis point decrease is primarily the result of our continued focus on expense management, including improved efficiency of store labor and strategic reductions in discretionary expense categories.

Such as professional fees and advertising these initiatives have more than offset the impacts of inflation on wages goods and services and deleverage from slightly lower sales volume.

Appreciation and amortization in the current quarter fiscal 'twenty four increased approximately $1 4 million in comparison to the same period last year, reflecting increased capital investment on store development technology initiatives and various infrastructure projects over the last three fiscal years.

We generated $34 5 million of operating income or 8% of net sales in the third quarter. This year compared to $34 2 million or seven 9% of net sales in the prior year's third quarter diluted earnings per share were $2 five for this years third quarter compared to $1 94 per share in the comparable period of fiscal 'twenty three.

We ended the third quarter of fiscal 'twenty, four with $29 6 million of available cash and cash equivalents on our unaudited condensed consolidated balance sheet and $96 $9 million of debt outstanding on our $160 million unsecured line of credit.

Net inventory at the end of the third quarter was $398 1 million a one 7% decrease from the prior year's third quarter and down five 4% from the beginning of the fiscal year.

Speaker 4: Capital expenditures during the 3rd quarter were 11.5M with approximately 75% attributed to store development projects, including new stores, remodels, relocations and new signage. We opened 10 net new stores in the 3rd quarter, bringing the store base to 1158 in 36 states.

Capital expenditures during the third quarter were $11 5 million with approximately 75% attributed to store development projects, including new stores Remodels relocations and new signage. We opened 10 net new stores in the third quarter, bringing the store base to 1158, and <unk> 36 States.

Speaker 4: We repurchase just over 700,000 shares under a share repurchase plan in the 3rd quarter at a total cost of 32Million. We also paid a recurring quarterly dividend during the quarter in the amount of 25 cents per eligible common share for a total outflow of approximately 3.1Million. Now, turn to.

We repurchased just over 700000 shares under our share repurchase plan in the third quarter at a total cost of $32 million. We also paid a recurring quarterly dividend during the quarter and the amount of 25 per eligible common share for a total outflow of approximately $3 1 million.

Now I'll turn to slide six year to date results.

Speaker 4: Total net sales for the first nine months of fiscal 24 increased 1% to 1.26 billion, while year-to-date comparable sales have decreased 1.9% versus the first nine months of the last year. Brick and mortar comp sales declined 2.7% and e-commerce comp sales increased 2.9% compared to the prior year.

Total net sales for the first nine months of fiscal 2004 increased 1% to $1 $2 6 billion, while year to date comparable sales have decreased one 9% versus the first nine months of the last year.

Brick and mortar comp sales declined two 7% in e-commerce comp sales increased two 9% compared to the prior year.

Speaker 4: Year to date gross margin was 33.5% of net sales versus 35.3% of net sales last year. This is an approximate 180 basis point decline. Please note the unfavorable gross margin various on a year over year basis has improved since the end of the 2nd quarter. We close Q2 trailing prior year gross margin by 240 basis.

Year to date gross margin was 33, 5% of net sales versus 35, 3% of net sales last year. This is an approximate 180 basis point decline. Please note the unfavorable gross margin versus on a year over year basis has improved since the end of the second quarter. We closed Q2 trailing prior year gross margin by 240 basis points.

Speaker 4: The decline in year-to-date gross margin continues to be driven by lower average product margin of approximately 240 basis points, this was 300 basis points at the end of Q2, and higher store occupancy costs of approximately 40 basis points.

The decline in year to date gross margin continues to be driven by lower average product margin of approximately 240 basis points. This was 300 basis points at the end of Q2 and higher store occupancy cost of approximately 40 basis points on the positive side, we experienced year over year improvements in freight shipping and logistics cost as a percent of net sales.

Speaker 4: On the positive side, we experienced year-over-year improvements in freight, shipping, and logistics costs as a percent of net sales.

Speaker 4: SG&A expenses were 23% of net sales for the first nine months compared to 23.2% in the same period last year. The approximate decrease of 20 basis points is primarily the result of lower spend in advertising and professional.

SG&A expenses were 23% of net sales for the first nine months compared to 23, 2% in the same period last year. The approximate decrease of 20 basis points is primarily the result of lower spend in advertising and professional fees. We have generated $96 4 million of operating income or seven 6% of net sales for the third quarter of fiscal 'twenty four.

Speaker 4: We have generated 96.4Million of operating income or 7.6% of net sales for the 3rd quarter fiscal 24 compared to 117.7Million or 9.4% of net sales in the prior years. 1st.

<unk> compared to $117 7 million or nine 4% of net sales in the prior year's first nine months net.

Speaker 4: Net income for the first nine months of this year was $72.3 million, or $5.66 cents per diluted share, compared with $89.6 million, or $6.71 cents per diluted share in the prior year comparable period. Capital expenditures for the first nine months of fiscal year were $37.2 million, predominantly related to store initiatives, including new store openings, relocations, expansions, remodels, and technology upgrades. I'll now turn the call over to Bill Quinn.

Net income for the first nine months of this year was $72 3 million or 6% or $5 66 per diluted share compared with $89 6 million or $6 71 per diluted share in the prior year comparable period.

Capital expenditures for the first nine months of fiscal year were $37 2 million predominantly related to store initiatives, including new store openings relocations expansions and Remodels and technology upgrades.

I'll now turn the call over to Bill Quinn to discuss consumer insights.

Speaker 2: Thank you, Bob. Starting with our loyalty program, I'm happy to report continued growth.

Thank you Bob starting with our loyalty program I'm happy to report continued growth in <unk>.

Speaker 2: Q3, our loyalty sales grew single digits. This was primarily driven by more member shopping and average ticket growth. Higher average unit retail drove the growth in average ticket and increased member shopping was driven by continued engagement from our existing members.

Q3, our loyalty sales grew single digits. This was primarily driven by more members shopping and average ticket growth.

Average unit retail drove the growth in average ticket and increased member shopping was driven by continued engagement from our existing members.

Speaker 2: We continue to make improvements to our loyalty program. We are especially excited to announce the launch of our connected partner.

We continue to make improvements to our loyalty program, we are especially excited to announce the launch of our connected partnership connect inhibit Nike loyalty program. This transformative partnership will further distinguish the hibbett retail experience customers can now sign up to be a connected member either in store or online also.

Speaker 2: connecting Hibbett to Nike's loyalty program. This transformative partnership will further distinguish the Hibbett retail experience.

Speaker 2: Customers can now sign up to be a connected member, either in-store or online. Also, both new and existing customers can sign up to be a connected member. Benefits of the program include exclusive shopping experiences, personalized content,

Both new and existing customers can sign up to be a connected member.

Benefits of the program includes exclusive shopping experiences personalized content and early access to Nike and Jordan remember product.

Speaker 2: Integrating Hibbitt Rewards and Nike Membership will improve the ways we engage and delight our members across all Omni-Channel Touch.

Integrating hibbett rewards and Nike membership will improve the ways, we engage and delight our members across all Omnichannel touch points.

Speaker 2: We heavily marketed the launch of the program, and we also have a variety of ongoing digital and in-store marketing campaigns.

We heavily marketed to launch the program and we also have a variety of ongoing digital and in store marketing campaigns customers have been very receptive to that program and we are pleased with the results we are seeing.

Speaker 2: Customers have been very receptive to the program, and we are pleased with the results we are seeing.

Turning to our E Commerce business in Q3 sales increased 12, 6% versus last year E. Commerce represented approximately 17% of total sales for the quarter versus last year's 15%.

Speaker 2: The Q3 sales increased 12.6% versus last year. Ecommerce represented approximately 17% of total sales for the quarter versus last year's 15%.

Speaker 2: We have seen a propensity of customers to return to online shopping, as indicated by our most recent surveys and Q3 sales data. Traffic, conversion, and average ticket all increased in Q3, driven primarily by footwear, as well as a strong back-to-school sales.

We have seen a propensity of customers to return to online shopping as indicated by our most recent survey in Q3 sales data traffic conversion and average ticket all increased in Q3, driven primarily by footwear as well as a strong back to school sales.

Speaker 2: Entering Q4, we are continuing to keep a pulse on how our customers are feeling. Customers continue to have elevated concerns around economic conditions, including inflation.

During Q4, we are continuing to keep a pulse on how our customers are feeling.

<unk> continue to have elevated concerns around the economic condition, including inflation.

Speaker 2: On a positive note, concerns around resuming student loan payments have declined since the summer. Also, our customers intend to purchase more this holiday season than last year. I will now hand the call back to Bob to discuss our guidance.

On a positive now.

Turning to render assuming student loan payments have declined since the summer also our customers intend to purchase more of this holiday season than last year.

I'll now hand, the call back to Bob to discuss our guidance.

Alright, we are moving forward to slide eight to.

Speaker 4: The business outlook for the fourth quarter of fiscal 24 remains challenging to predict. Inflation has continued to have a broad impact not only on consumer sentiment and spending patterns, but has also contributed to increases in our operating costs in the form of wages and prices we pay for various goods and services.

The business outlook for the fourth quarter of fiscal 'twenty four remains challenging to predict inflation has continued to have a broad impact not only on consumer sentiment and spending patterns. But has also contributed to increases in our operating costs in the form of wages and prices, we pay for various goods and services higher interest rates have driven up the cost of borrowing for us and may also be.

Speaker 4: Higher interest rates have driven up the cost of borrowing for us and may also be affecting discretionary purchase decisions for those consumers with variable rate loans or credit card debt. We also expect the heavier promotional environment to continue for the near term. All these factors contribute to an uncertain retail environment as we enter the traditional holiday shopping period.

Affecting discretionary purchase decisions for those consumers with variable rate loans or credit card debt. We also expect the heavier promotional environment to continue for the near term all of these factors contribute to an uncertain retail environment as we enter the traditional holiday shopping period. Despite.

Speaker 4: Despite these headwinds and uncertainties, our strong third-quarter results, coupled with a fourth-quarter outlook that remains consistent with the assumptions supporting our previous guidance, has resulted in an adjustment of several elements of our FY24 full-year guidance. The most prominent change is an increase in our diluted EPS range. We are now anticipating diluted EPS for the full year to be between $8.00 and $8.30. This is up from $7.00 to $7.75 range that we provided earlier.

Despite these headwinds and uncertainties, our strong third quarter results, coupled with our fourth quarter outlook that remains consistent with the assumptions supporting our previous guidance as resulted in adjustment of several elements of our fiscal 'twenty four full year guidance. The most prominent change with an increase in our diluted EPS range. We are now anticipating diluted EPS for the full year to be between.

$8 $8 30.

This is up from $7 to $7 75 range that we provided earlier.

Speaker 4: Consistent with prior guidance, net sales for the full year, including the impact of the 53rd week, are anticipated to be flat to up approximately 2% compared to our fiscal 23 results. The 53rd week is expected to be approximately 1% of full year sales. Approximately 52% of our total sales will be recognized in the 2nd, half of the fiscal year.

Consistent with prior guidance net sales for the full year, including the impact of the 50 <unk> week are anticipated to be flat to up approximately 2% compared to our fiscal 'twenty. Three results. The 50 <unk> week is expected to be approximately 1% of full year sales approximately 52% of our total sales will be recognized in the second half of the fiscal year.

Speaker 4: Total comparable sales are still expected decline in the low single digit range for the full year. For your brick and mortar comparable sales are also still anticipate to be in the negative low single digit range. Whether we now expect for your ecommerce revenue to be flat to upload single digits. We are anticipating the slight mix shift toward ecommerce that we saw in the 3rd quarter. We'll continue through the holidays.

Total comparable sales are still expected to decline in the low single digit range for the full year full year brick and mortar comparable sales are also still anticipate to be in the negative low single digit range. However, we now expect full year ecommerce revenue to be flat to up low single digits. We are anticipating a slight mix shift towards E. Commerce that we saw in the third quarter will continue through the holiday season.

Speaker 4: We expect our net new store count to be approximately 40 units for the year. This is at the low end of the previous range as delays and external approvals and longer lead times on inspections and permitting have pushed back some of our construction schedule.

We expect our net new store count to be approximately 40 units for the year. This is at the low end of the previous range as delays in external approvals and longer lead times on inspections and permitting have pushed back some of our construction schedules.

Speaker 4: We anticipate the aggressive promotional environment to continue in the near term. Projected full year gross margin remains unchanged from previous guidance at approximately 33.9% to 34% of net sales.

We anticipate the aggressive promotional environment to continue in the near term projected full year gross margin remains unchanged from previous guidance at approximately 33, 9% to 34% of net sales.

Speaker 4: We have lowered the anticipated range as a percent of net sales to 23.1% to 23.3% down from 23.3% to 23.5%, which was provided in our previous guidance. We're actively managing discretionary expenses and continue to focus on identifying efficiencies throughout the organization, which are currently helping us offset inflationary pressures. Most notably in labor and benefit.

We have lowered the anticipated SG&A range as a percent of net sales to 23, 1% to 23, 3% down from 23, 3% to 23, 5%, which was provided in our previous guidance.

We're actively managing discretionary expenses and continuing to focus on identifying efficiencies throughout the organization, which are currently helping us offset inflationary pressures, most notably in labor and benefits.

Speaker 4: Operating margin for the year is expected to be in the range of 7.6% to 8% of net sales, up from previous guidance of 7.4% to 7.8% of net sales. Operating profit is a percent of net sales in the fourth quarter benefits from higher sales volume, although the 53rd week is not considered a significant driver of incremental operating profit due to the low sales volume projected for that week.

Operating margin for the year is expected to be in the range of seven 6% to 8% of net sales up from previous guidance of seven 4% to seven 8% of net sales operating profit as a percent of net sales in the fourth quarter benefits from higher sales volume, although the 50 <unk> week is not considered a significant driver of incremental operating profit due to the low.

Sales volume projected for that week.

Speaker 4: We still expect to carry debt throughout the remainder of the year, although we have lowered the interest expense range as a percent of sales. Consistent with previous commentary, we anticipate that borrowings will moderate as inventory levels decline throughout and after the holiday season.

We still expect to carry that throughout the remainder of the year. Although we have lowered the interest expense range as a percent of sales consistent with previous commentary, we anticipate the borrowings will moderate as inventory levels decline throughout and after the holiday season.

Speaker 4: As noted previously diluted earnings per share anticipated being the range of 8 to 830. Up from previous guidance of 7 to 775. This range assumes an estimated full year tax rate of approximately 23.1 to 23.3% down slightly from prior guidance and an estimated year and weighted average diluted share count of approximately 12.6Million. Also down slightly from prior guidance.

As noted previously diluted earnings per share anticipated to be in the range of 8% to 830% up from previous guidance of 7% to 775. This range assumes an estimated full year tax rate of approximately $23. One to 23, 3% down slightly from prior guidance and an estimated year end weighted average diluted share count of approximately $12 6 million.

<unk> also down slightly from prior guidance we.

Speaker 4: We continue to project capital expenditures in the range of $60 to $70 million, with the largest allocation focused on new store growth, remodels, relocations, new store signage, and improving the consumer experience.

We continue to project capital expenditures in the range of $60 million to $70 million with the largest allocation focused on new store growth Remodels relocations, new store signage and improving the consumer experience.

Speaker 4: Our capital allocation strategy will continue to include share repurchases and recurring quarterly dividends in addition to the capital expenditures noted above.

Our capital allocation strategy will continue to include share repurchases and recurring quarterly dividends dividends. In addition to the capital expenditures noted above.

Speaker 4: That concludes our prepared remarks. Operator, please open the line for questions.

That concludes our prepared remarks, operator, please open the line for questions.

Speaker 1: Thank you. We will now be conducting a question and answer session. At this time, we would like participants to ask one question, then re-queue for any additional questions. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you would like to remove your question.

Thank you we will now be conducting a question and answer session. At this time, we would like participants to ask one question and then re queue for any additional questions. If you would like to ask a question. Please press star one on your telephone keypad a.

Confirmation tone will indicate your line is in the question queue. You May press star two if he would like to remove your question from the queue.

Speaker 1: For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please.

For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys.

Please while we poll for questions.

Speaker 1: Our first question comes from Mitch Kometz from Seaport Research. Please proceed.

Our first question comes from Mitch <unk> from Seaport Research. Please proceed.

Speaker 5: Uh, yes, thanks for taking my question. I'm just hoping to get a better sense of consumer spending pattern. Sounds like you guys had a good.

Yes, thanks for taking my question.

I was hoping to get a better sense of consumer spending patterns. It sounds like you guys had a good start.

Speaker 5: back to school. I'm guessing maybe things slowed a bit in September and October . It sounds like from a seasonal standpoint there were some challenges.

And school I'm guessing it'd be things slowed a bit in September and October it sounds like from a seasonal standpoint, there were some challenges.

Speaker 5: And then there was a comment made about the holiday spending outlook, that you expect your consumer to spend more for this holiday than last. Can you just maybe elaborate on some of that? I don't know if you can kind of give us the months for the quarter, but just talk a little bit about what you're seeing in terms of kind of how the consumer's purchasing, you know, sort of peak versus non-peak periods.

And then there was a comment made about the holiday spending outlook.

Thank you consumer to spend more for this holiday than lab can you just maybe elaborate on some of that I don't know if you can kind of give us the months for the quarter.

A little bit about what youre seeing in terms of kind of how the consumers' purchasing sort of peak versus non peak periods.

Speaker 3: Yeah, morning matches, Jared, I'll start and then Bill and like, we've been involved in the conversation as well. Yeah, I think what we saw, obviously, the, the peak of back to school was, was really strong for us. We saw that at the tail end of the 2nd quarter into the 3rd quarter of the month of August .

Yes.

Good morning, Matt just Jared I'll start and then.

And likely been involved in the conversation as well.

I think what we saw obviously the peak back to school was really strong for us and we saw that at the tail end of the second quarter into the third quarter in the month of August So really pleased with the back to school results really across all categories and we're really excited around what the seasonal apparel was showing us Jerry back to school.

Speaker 3: Really pleased with the back to school results really across all categories and we're really excited around.

Speaker 3: What the seasonal apparel was showing us during back to school, you know, unfortunately, as we got outside of back to school outside of that P, you know, things definitely slowed down some with the biggest impact coming in apparel. And we do believe that is a direct result of the weather patterns not being favorable with regard to warmer temperatures year over year and lack of wet weather. So.

Unfortunately, as we got outside of back to school outside of that.

<unk> has definitely slowed down some with the biggest impact coming in apparel.

We do believe that is a direct result of the weather patterns not being favorable with regard to warmer temperatures year over year.

Lack of wet weather so.

Speaker 3: We felt great again and back to school, a little bit challenged towards the end of the quarter and apparel, as I said, but footwear was fairly consistent through the quarter felt really good about footwear and in particular, the launch cadence throughout the quarter. We felt really strongly about built.

We felt great again and back to school, a little bit challenged us towards the end of the quarter in apparel as I said, but footwear was fairly consistent through the quarter felt really good about footwear.

And in particular, the launch cadence throughout the quarter, we saw a really strong laid out.

Speaker 2: Yeah, good morning Mitch. So, let's answer your question around how customers are feeling that they do have elevated financial concerns, but at the same time.

Yes, good morning, Mitch.

But to answer your question around how customers are feeling that they do have elevated financial concerns, but at the same time. They do you plan on spending more during the holidays in particular on footwear as.

As well as online when we dig further into our survey results.

Interesting to sound that basically the younger you are the more positive ECL. So Gen Z.

As well as millennials are definitely bullish tend to spend more versus the older population, which is good for us because generally millennials are core customers.

Speaker 2: which is good for us because Gen Z Millennials are our core customers.

Also for those people that.

<unk> financial challenges that they are planning to make trade offs.

Back in things like eating out.

Entertainment.

Our retail and also some customers plan to lean more into credit.

During the holiday.

Yes, okay. Thanks.

Yes.

Speaker 6: Go ahead, Ben. Go ahead, Ben. I was going to say, you know, Jared and Bill summed it up pretty well. We had a really nice, strong back-to-school selling season, you know, it impacts our business in a big way. The seasonal patterns, Jared mentioned too, impacts some of our outerwear sales, but I feel good about our position in inventory going into the holiday season. You know, our peak seasons have been strong and really look forward to seeing what the Christmas, you know, selling season brings in store.

But.

Gary and Bill summed it up pretty well.

We had a really national back to school selling season.

The only impacts our business in a big way the seasonal patterns Darrin mentioned too.

Impact of silver outerwear sales, but I feel good about our position in inventory going into the into the holiday season.

Our peak seasons have been strong and really look forward to seeing what will be Christmas selling season brings in stores.

Alright, Thanks, I'll go ahead and re queue.

You bet.

Speaker 1: Our next question comes from Sam Poser from Williams Trading. Please proceed.

Our next question comes from Sam Poser from Williams trading. Please proceed.

Speaker 7: Good morning, everybody. Thank you very much. Happy Thanksgiving, almost. A question on the inventory, Jared. You mentioned it would be down mid-teens at the end of the year, which would get it about as clean as from a pure dollar perspective as we've seen it in some times. The promotional activity that you're seeing that's impacting the gross margin, once your inventory gets to that level.

Good morning, everybody. Thank you very much happy Thanksgiving.

A question on the inventory Jerry you mentioned it would be down mid teens at the end of the year.

Which would get it about as clean from a pure dollar perspective, as we've seen it in some times.

Promotional activity that Youre seeing.

That's impacting the gross margin.

Once your inventory gets to that level.

Speaker 7: regardless of what's going on out in the marketplace, I mean, do you anticipate a significant improvement in your gross margin on your, I call it your, let's say your product margin going into fiscal 25?

Regardless of what's going on out in the marketplace. I mean do you anticipate a significant improvement in your gross Martin on your oncology or let's say a product margin going into fiscal 'twenty five.

Speaker 3: Yeah. Hey, morning, Sam. Happy Thanksgiving as well. Yeah, so it's really, you know, it's a two-pronged approach. I mean, obviously, we're hyper-focused on the level of inventory.

Hey morning, Sam Happy Thanksgiving as well.

So it's really it's two part of the approach I mean, obviously, we're hyper focused on the level of inventory.

Speaker 3: You know, we believe we'll get to a more optimal level by the end of the year with regard to the total level of inventory, but we do still have some pressures with regard to content. So we're highly hyper focused on the content. Uh, we'll continue with targeted promotions around the content to try and get, you know, that.

We believe we will get to a more optimal level by the end of the year with regard to the total level of inventory, but we still have some pressures with regard to content. So we're highly hyper focused on the content.

We will continue with targeted promotions around the content is to try and get that.

Speaker 3: Our healthiest level with regard to what we're showing to the consumer as we go forward. So likely there's going to be a few challenges as we head into next year. With regard to the content that we believe we'll get that resolved pretty quickly as we head into.

Our healthiest level with regard to what we're showing to the consumer as we go forward. So you'll likely there'll still be a few challenges as we head into next year with regard to the content that we believe we will get that resolved pretty quickly.

As we head into next year.

Speaker 7: Thanks. And then secondly, the new Nike part, how much is the new Nike partnership and what sounds like better allocations?

Thanks, and then secondly.

The new Nike how much is the new Nike partnership.

And it sounds like better allocations.

Speaker 7: impacting, you know, where does that impact more in stores or online? And then secondly, you commented that the

Impacting where does that impact more in stores or online and then secondly.

You commented that the.

Speaker 7: launch calendar was very favorable in Q3. How does it look within QQ? Give us any indication, I know it's early, on what 4Q looks like to date. Cross your fingers.

Launch calendar was very favorable in Q3, how does it look going.

<unk> any indication I know it's early.

On the on sort of.

What <unk> looks like to date.

Shifting gears again to answer your question.

Speaker 3: Well, we're not going to answer quarter to date, but we do feel good about the launch calendar in the 4th quarter and the support that we have regarding allocations in the 4th quarter.

Yes.

Not going to answer quarter to date, but we do feel good about the launch calendar in the fourth quarter and the support that we have regarding allocations in the fourth quarter.

Speaker 3: You know, specific to Nike connected, it's really. Will affect both channels as we go forward. Bill will give a little more color here in a moment on what we did across all the channels from a connected membership perspective, but specific to product.

Specific to Nike connected.

Really it will affect both channels as we go forward.

Bill will give a little more color here in a moment on what we did across all the channels from a connected membership perspective, but specific to product.

Speaker 3: You know, there is additional focus around our business with regard to access points that will both impact brick and mortar, as well as digital. We'll certainly have an enhanced profile of vendor direct offering that will affect primarily the digital space. And then just a general focus of our business being elevated around additional support of inventory, you know, in the most coveted products. So we feel really good about where we stand, or our relationship and partnership has been

There is additional focus around our business with regard to access points that will both impact brick and mortar as well as digital.

We will certainly have an enhanced profile of vendor direct offering.

That will effect, primarily in the digital space.

And then just a general focus of our business being elevated.

Additional support of inventory in.

In the most coveted products. So we feel really good about where we stand our relationship and partnership has been incredible and this will only help to reinforce its as we continue to put forth a great experience for consumers.

Speaker 3: Incredible, and this will help to reinforce it as we continue to put forth a great experience for consumers.

Speaker 2: Yeah, Sam just gave you a little bit more on Connected, so it will definitely help with acquisition and retention for both channels.

Yeah.

Sam just give you a little bit more on connected.

Definitely have a acquisition and retention for both channels.

And what we're seeing is definitely yes.

Good sign up rates for the connected program, which is.

Speaker 2: positive. We are we are doing connected member events, you know driving engagement at our stores as well as

Positive.

We are getting connected member events driving engagement at our stores as well as member only products.

Speaker 2: talk with our customers. Customers are happy. I mean, that's the basic gist of it is it's more, that the program is more valuable because you're getting more.

So talk with our customers customers are happening I mean, thats the basic gist of it is more <unk>.

Program is more valuable because you're getting more than Jeff and Kevin.

Speaker 2: And as a result of that, we're starting to see a new customer.

And as a result of that we're starting to see new customer sign ups increasing overall.

Speaker 7: Thanks. And just one last thing. Can you give us any variation between what you're seeing out of Hibbets and CityGear?

Thanks, and just one last thing can.

Can you give us any variation between what youre seeing out inhibits and city gear.

It's pretty consistent Sam.

Speaker 3: Pretty consistent, Sam. Yeah, I think obviously both of our brands are highly focused on the fashion consumer, so it's been pretty consistent. Thanks.

I think obviously, both both of our brands are highly focused on the fashion consumer so it's been pretty consistent.

Thanks, very much continuing to say thank you. Thank.

Thank you.

Speaker 1: Our next question comes from Christina Fernandez from TESLI Advisory Group. Please proceed.

Our next question comes from Christina Fernandez from carefully Advisory group. Please proceed.

Speaker 8: Hi, good morning and congratulations on the better results. I wanted to ask about the channel makes your theme particularly with the strong performance in e-commerce. Do you think it's more due to the?

Hi, good morning, and congratulations on the on the better results I wanted to ask about the channel mix Youre seeing particularly with the strong performance in E Commerce.

Do you think it's more due to the <unk>.

Speaker 8: product launches or consumers looking for promotions which have been more, I guess, significant online. We'll first sort of, yeah, the trends in e-commerce. And then I guess, what initiatives are you taking to drive more traffic in stores, which has been a challenge for a few quarters now? Thank you.

Product launches or.

Tumors looking for promotions, which have been more.

I guess significant online.

Well first yes, the trends in E Commerce, and then I guess.

But wanted to make sure. This are you taking to drive more traffic in stores, which has been at.

Challenge for a few quarters now.

Yes, hi, good morning, Cristina as Jared.

Speaker 3: Hi, good morning. Christina is Jared. I'll start. Yeah, I think from a channel perspective, obviously, we're, we're hyper focused on both channels.

I'll start I think from a channel perspective, obviously, we're hyper focused on both channels.

Speaker 2: You know, our ability to gain, you know, additional access and inventory levels and, you know, a lot of the most coveted products is certainly driving additional engagement from a digital perspective, so, you know, we believe a lot of that is due to the strength of our footwear business and less about the promotional activity from a digital perspective. Bill, I think I'll hand it to you. I'm sure you'll have some commentary around this. Yeah, yeah, absolutely. So, you know, the, as Jared said, the strength of the footwear business really drove, you know,

Our ability to gain additional access and inventory levels.

The most coveted products is certainly driving additional engaged with it from a digital perspective.

So we believe a lot of that is due to the strength of our footwear business and less about the promotional activity from a digital perspective.

Bill.

Yeah sure Youll have some commentary around this yeah, yeah absolutely.

As Jared said the strength of the footwear business really drove that ecommerce penetration for the quarter.

Speaker 9: Cool, man.

We believe that will continue just based on what we're looking at here for Q4. So we did raise guidance for for digital flat.

Speaker 2: that will continue based on what we're looking at here for Q4. So we did raise guidance for digital to flat to single-digit positive.

Flat to single digit positive.

Speaker 2: You know, as far as, you know, driving store traffic and what we're doing around that.

As far as driving store traffic and what we're doing around that.

Speaker 2: Our biggest acquisition and retention vehicle is our Lolfi program. We're doubling down on that. We have a variety.

Our biggest acquisition and retention vehicle is our loyalty program and we're doubling down on that we have a variety of initiatives to continue improving that program as well as <unk>.

Speaker 2: continue that and improving that program as well as connect.

Obviously.

Speaker 2: We're also doing a lot around launches, particularly in-store, to drive higher sell-throughs and more traffic.

We're also doing a lot around launches, particularly in store to drive higher sell throughs in more traffic around that as well.

Speaker 1: Our next question comes from Justin Klaber from Robert W. Baird. Please proceed.

Our next question comes from Justin Kleber from Robert W. Baird. Please proceed.

Speaker 7: Hey, guys, it's Justin Klaver. Thanks for taking the questions and congrats on the partnership with Nike. So I want to ask a question on margin, kind of two parts. Just first on the product margin decline of 130 in the quarter, can you parse that out maybe a bit at least directionally between apparel and footwear and kind of what's really driving that decline, and then just longer term, your new operating margin outlook for this year, 76 to 8%.

Hey, guys. This is Justin klaver, thanks for taking the questions and congrats on the on the partnership with Nike.

I wanted to ask a question on margin kind of two parts.

First on the product margin decline of 130 in the corner can you parse that out maybe a bit at least directionally between <unk>.

Apparel and footwear and kind of what's really driving that decline and then just longer term your new operating margin outlook for this year, 706% to 8%.

Speaker 10: I guess barring some economic shock, do you guys feel this level is kind of the new baseline now for operating margins and we can either hold or maybe even expand as we look out into the future? Thank you.

Yes, I guess barring some economic shock do you guys still this level is kind of a new baseline now for operating margins and we can either hold or.

Even expand as we look out into the future. Thank you.

Speaker 3: Hey, Justin, Jared. Good morning. Thank you. I'll start with regard to the product. It's really across both footwear and apparel. I mean, as we said, we're.

Hey, Justin it's Eric Good morning, Thank you.

I'll start with regard to the product and it's really across both footwear and apparel I mean, as we said, where we're making great progress secondly, the team has done an incredible job of managing the inventory getting the inventory lower and as we've said we feel great about where we expect plans in the fourth quarter.

Speaker 3: You know, we're, we're making great progress, you know, Stephanie, the team has done an incredible job on managing the inventory, getting the inventory lower. And as we said, we feel great about where we expect to land in the 4th quarter. But we still have some work to do to get to an optimal level of content. So that's across both categories. I would also say that, you know, typically the seasonal product early in the season tends to be very margin rich.

We still have some work to do to get to an optimal level of content. So that's across both categories. I would also say that typically the seasonal product early in the season tends to be very margin rich.

Speaker 3: So, some of the challenges around seasonal apparel in the latter part of a quarter didn't help us as much as we might have expected with regards to margin from a product standpoint.

So some of the challenges around seasonal apparel in the latter part of the quarter.

It didn't help us as much as we might have expected with regard to margin from a product standpoint.

Bob.

Speaker 4: Morning, Justin, as far as, you know, obviously, we're not giving any guidance into the future at this point beyond beyond the current fiscal year. But I think, you know, directionally.

Good morning, Justin.

As far as you know, obviously, we're not giving any guidance into the future at this point beyond beyond the current fiscal year, but I think.

Directionally.

Speaker 4: We're obviously looking to continue to try to slowly, you know, improve performance over time. Nothing's a complete linear equation, so we're going to see some ebb and flow in margin. We'll see some ebb and flow in SG&A, but I think, again, we've kind of, we've talked about this before about established kind of new baseline. We do believe that this is a number we can, again, be comfortable with probably into the near term. But, again, we'll provide more formal guidance, obviously, into fiscal 25 after we finish.

We're obviously looking to continue to try to slowly improve.

Improved performance over time, Nothing's, a complete linear equation. So we're going to see some ebb and flow and margin will see some ebb and flow in SG&A, but I think again, we've kind of we've talked about this before about established kind of new baseline. We do believe that this is a number we can again be comfortable with probably into the near term, but again, we will provide more.

Formal guidance, obviously and took into fiscal 'twenty five after we finish the current year.

Speaker 11: All right, guys, thanks, and Happy Thanksgiving to everyone. Thank you. Thank you.

Alright, guys, Thanks, and happy Thanksgiving everyone.

Thanks.

Thank you.

Speaker 1: Ladies and gentlemen, we apologize for the technical difficulties. We'll move on to our next question, which is coming from the line of Alex Perry with Bank of America. Please proceed with your question.

Ladies and gentlemen, we apologize for the technical difficulties, we'll move onto our next question, which is coming from the line of Alex Perry with Bank of America. Please proceed with your question.

Speaker 12: Hi, thanks for taking my questions here. I guess first I just wanted to ask a little bit more about the guidance and sort of the 4Q implied guidance. It looks like the comp guidance and gross margin guidance remains unchanged. Is that just conservatism or you talked about the launch calendar being strong or are you seeing, you know, more cautious consumer behavior that that led to not raising the guide? Thanks.

Hi, Thanks for taking my questions here I guess first I just wanted to ask a little bit more about the guidance and sort of the <unk> implied guidance. It looks like the comp guidance gross margin guidance remains unchanged is that just conservatism or are you talked about the launch calendar being strong or are you seeing more.

More cautious consumer behavior that that led to not raising the guidance. Thanks.

Speaker 3: Hey, Alex. Good morning, Jared. I'll start. Yeah, I mean, I think all the above, right? I think there's still.

Hey, Alex Good morning, Jared I'll start, yes, I mean, I think all the above right I think they are still.

Speaker 3: A lot of market uncertainty, you know, there's uncertainty around the consumer. We still think there's elevated inventory levels in the market, which will likely lead to a pretty heavily promotional environment. The weather at the tail end of the third quarter obviously didn't help that. So I think all of the above, there's still a lot of uncertainty in the market. And even though we're confident in our plans and certainly confident about the investments we've made in the business, there is still a lot of uncertainty in the market.

A lot of market uncertainty or certainty.

Certainty around the consumer.

We still think there is elevated inventory levels in the market, which will likely lead to a pretty heavily promotional environment.

The weather at the tail end of the third quarter, obviously didn't help that so I think all of the above.

A lot of uncertainty in the market and even though we are confident that our plans and certainly confidence about the investments we've made in the business.

There is still a lot of uncertainty in the market.

Speaker 12: That's really helpful. And then just a follow-up. Can you maybe talk a little bit more about some of the secondary brand performance? I know that had been, you know, a bit softer earlier in the year. Are there any call-outs or strong brands outside of Nike and Jordan that are continuing to help the business?

That's really helpful. And then just a follow up can you maybe talk a little bit more about some of the secondary brand performance I know that had been.

A bit softer earlier in the year are there any callouts as strong brands outside of Nike and Jordan are continuing to to help the business.

Speaker 3: Yeah, I mean, we have a really broad brand portfolio, as you know.

Yes, I mean, we have a really broad brand portfolio as you know.

Speaker 3: We typically don't talk specifically about a lot of brands on this call. But, you know, historically, we tend to have a pretty significant brand churn. You know, there are some of our secondary brands that are doing a nice job from a pipeline perspective of innovation or at least newness. You know, and innovation in our business doesn't necessarily mean new technology. It can mean something that hasn't been in the market that's brought back.

We typically don't.

Talk specifically about a lot of brands on this call but.

Historically, we tend to have a pretty significant brand churn.

There are some of our secondary brands that are doing a nice job from a pipeline perspective of innovation or at least some newness.

And innovation in our business doesn't necessarily mean, the technology that can mean something that hasnt been in the market that's brought back.

Speaker 3: That's brought back and put forth in front of the consumer. So some brands are doing a little better with regard to the innovation pipeline. And they're succeeding and others are still unfortunately very slow with regard to innovation that's continuing to have challenges.

Thats brought back and put forth in front of the consumer so some brands are getting a little better with regard to the innovation pipeline.

And they are succeeding and others are still unfortunately, very slow with regard to innovation, that's continuing challenges so yes.

Speaker 3: You know, as brands improve throughout next year and into the future with regard to that newness and innovation profile, we'd expect a better performance out of our.

As brands improve.

Next year and into the future with regard to that newness and innovation profile, we would expect a better performance out of our secondary brands.

Speaker 12: Perfect. And then just my last one. Could you just talk a little bit more about apparel inventories? Are there still overages that need to be worked through? And I guess on the seasonal product, has that improved a bit now that the weather has turned things?

Perfect and then just my last one could you just talk a little bit more about apparel inventories are there still overages that need to be worked through and I guess on the seasonal product because that improved a bit now that the weather has turned.

Speaker 3: Yep. Hey, Alex, Jared again. We feel really good about where our apparel inventory is. Obviously, that was the category that we really started putting solutions against first. So, no real significant challenges with regard to apparel. Obviously, there's a lot of business to be done in the 4th quarter and a lot of uncertainty out there. So we'll see how that all finishes up. But again, we feel good about where the inventory is expected to land and really good about where we expect to have content as.

Yeah, Hey, Alex Jared again feel.

Feel really good about where our apparel inventory is obviously that was a category that we really put it started putting solutions against first so no real significant challenges with regard to apparel, obviously, there's a lot of business to be done in the fourth quarter and a lot of uncertainty out there. So we'll see how that all finishes up.

Again, we felt good about where the inventory is expected to land.

And really good about where we expect to have content.

As we get into next year.

Speaker 4: Perfect. That's really helpful. Best of luck for this holiday season. Thank you so much.

Perfect. That's really helpful. Best of luck this holiday season.

So I wanted to.

Thank you. Our next question is coming from John Lawrence with the Benchmark Company. Please proceed with your question.

Speaker 1: Thank you. Our next question is coming from John Lawrence with the Benchmark Company. Please proceed with your question.

Speaker 13: Great, thank you. Congrats, guys. Mike, would you talk a little bit about expenses? I mean, obviously, great strides there, and I know you're doing a lot. What inning are we in? Before, you would wonder if you're cutting into muscle on the labor side, whatever, just some thoughts on how much room you have on the expense cuts.

Great. Thank you.

Congrats guys and Mike.

Mike would you talk about a little bit about expenses I mean, obviously, great strides there and I know you're doing a.

What inning are we in before you would wonder if you're cutting into muscle on the labor side whatever just.

Just some thoughts on how much room, you have on the expense cuts.

Speaker 2: Yeah, good morning. Thanks for the question. Then we'll come in after me on this slide.

Good morning. Thanks for the question then will come in after me on this one I think.

Speaker 5: To set the table on the question, if you'll recall, several quarters ago, we spoke about the fact that sales had accelerated over the past few years, and we dropped some costs inadvertently as.

To set the table on the question if youll recall.

Several quarters ago, we spoke about the fact that sales had accelerated over the past few years and we drove some costs inadvertently as as as.

Speaker 2: you know, as is normal. We drug some costs into our current structure. We went a little too far on a handful of things, whether that was a handful of people or a handful of projects or particular systems that we didn't need. And so we began a systematic process to review those about 12 months ago, and that has borne fruit. And we're pretty proud of that. We don't think that we're anywhere near cutting into the muscle. I would...

As is normal we drove some cost into our current structure. We went a little too far on a handful of things whether that was a handful of people or a handful of projects or particular systems that we didn't need and so we think we began a systematic process to review those.

About 12 months ago that has borne fruit and we're pretty proud of that we don't think that we're anywhere near cutting into the muscle.

I would term it more we're taking the savings and re applying them to the consumer experience which has.

Speaker 5: We are taking the savings and reapplying them to the consumer experience which has the virtuous circle of improving cost, improving our efficiency and effectiveness and speed with which we can serve the customer.

The virtuous circle of improving cost, improving our efficiency and effectiveness and speed with which we can serve the customer.

Speaker 2: Ben? Yeah, Mike. Appreciate it, John . It's been nice. You know, it is a little bit rare in retail when you're able to kind of gain both efficiency while handling.

Yes, Mike I appreciate it Jonathan midnight.

It is a little bit rare in retail when youre able to kind of gain both efficiency, while increasing your effectiveness and to your point not cutting into that muscle.

Speaker 6: to your point, not cutting into that muscle. Our big move here to the mobile platform has kind of enabled us to do both. You know, putting those tools in our associates' hands has made them even more productive and kind of enabled them to do their job better with the customer. It's kind of elevated that customer experience and the associate experience, I might add, to Mike's point. That combined with, you know, our sales culture out there has led to really results and improved SG&A for, you know, Q3 specifically.

Our big move here to the mobile platform is kind of enabled us to do both.

Putting those tools in our associates' hands has made them even more productive in and enable them to do their job better with the customer.

It's kind of elevated customer experience and the associate experience I might add to mikes point.

That combined with our sales culture out there it's led to really results improved SG&A for Q3, specifically.

Speaker 6: Just really proud kind of want to state that of all the hard work, you know, done from our associates and being able to do that and really elevating that customer experience.

I'm, just really proud kind of.

State that of all the hard work done from our associates and being able to do that and really elevating the customer experience in store Randall.

Speaker 13: Yeah, thanks. And the last one for me is just taking that thought going forward, you get back to more normal weather patterns, et cetera, the apparel business, and there's no reason with a reasonable, with a reasonable positive comp that you can't leverage that even further.

Yes, Thanks and last one for me is just taking that thought going forward you get back to more normal weather patterns et cetera, the apparel business and Theres no reason with a reasonable.

With a regional positive comp that you can't leverage that even further.

Speaker 5: Yeah, we think so. And so to answer your 1st question, we think we're in the mid innings. Just know that we're not going to take all that to the bottom line. We are again, we'll reiterate reinvesting much of those savings into the business model so that we can continue. Into the future, having that positive consumer experience online and at retail. But thanks for the question.

Yes, we think so and so to answer your first question. We think we are in the mid innings.

Just know that we're not going to take all of that to the bottom line. We are again.

Reiterate.

Reinvesting much of those savings into the business model. So that we can continue.

The future, having that positive consumer experience online and at retail.

Thanks for the question.

Great. Thanks, guys happy holidays.

Thank you.

Thank you. The next question is coming from Mitch <unk> with Seaport Research. Please proceed with your question.

Speaker 1: Thank you. The next question is coming from Mitch Cummins with Seaport Research. Please proceed with your question.

Speaker 5: Yeah, I just had a quick follow-up on the women's business. I just want to have a better understanding there because

Yes, quite a quick follow up on.

Our womens business I, just wanted to have a better understanding there because.

Speaker 5: That was up in the quarter. I think you said that footwear was up mid-teens. Can you say how much of your business is women's? Can you elaborate on?

That was up in the quarter I think you said that footwear was up mid teens can you say how much of your businesses Women's can you can you elaborate on this.

Speaker 5: the strength of that business, particularly in footwear. Like how much of it is that maybe there's just a better underlying product trend in women's or that you're better positioned to take market share there? And like, what do you see the runway for your women's going forward? Like, do you think there is continued opportunity for kind of outperformance of that side of the business?

The strength of that business, particularly in footwear like how much of it is maybe there is just a better underlying product trend in women's or that youre better positioned to take market share there and like what do you see the runway for your women's going forward like do you think there is.

The opportunity for kind of the outperformance of that side of the business.

Speaker 3: Hey, Mitch, good morning again, Jared. Yeah, I think look, if we really go back and.

Yeah, Hey, Mitch good morning again.

Yes, I think look if we really go back in.

Speaker 3: look at our history and history in this industry, the women's really haven't been focused on. We took a significant approach in 2020 when we went through our merchandising reorganization that put a focus on each gender. We felt like women's had the broadest opportunity, followed by kids.

Look at our history and the history of this industry to women's really hasn't been focused on.

We took a significant approach in 2020, when we went through our merchandising reorganization that put a focus on each gender we felt like women's has the broadest opportunity followed by kids.

Speaker 3: Since that point, we've more than tripled the women's business. So I feel great about what we're doing in women's. We have a hyper-focused team, specifically on women's, that we've added resources to. And we're getting great focus from our brand partners on the women's business. The women's business.

Is that point more.

<unk> tripled the women's business, so feel great about what we're doing in women's or we have a hyper focus team specifically on women's that we've added resources to.

And we're getting great focus from our brand partners on the women's business.

The women's business.

Speaker 3: Very, very fast and trend forward for us, and our team has done an exceptional job on following those trends and getting the right levels of inventory and getting support for the vendors, and we still see it as a big growth vehicle for us.

Very very fast and trying to forward for us and our teams doesn't accept an exceptional job on following those trends and getting the right levels of inventory and getting support from the vendors and we still see it as a big growth vehicle for us.

Alright, Thanks again.

Thank you. Thank you.

Yes.

Speaker 1: Thank you. Our final question is coming from the line of Sam Poser with Williams Trading. Please proceed with your question.

Thank you. Our final question is coming from the line of Sam Poser with Williams trading. Please proceed with your question.

Speaker 7: Since I got the last one, I got a handful. The inventory cleanup that you're doing, that you talked about, Jared, to get the quality better, is this something where you're sort of being more aggressive during the holiday to sort of take care of it while the ducks are flying kind of situation?

Since I got the last one I got a handful.

The inventory cleanup that youre doing that you talked about Jared.

To get the quality better is this something where.

You are sort of being more aggressive during the holiday to sort of take.

To take care of it while the ducks are flying kind of situation.

Speaker 3: Yeah, I think, you know, it's really the approach is to remain targeted with regard to promotions. I mean, we don't, we're not in a position where we need to do this mass fire sale with regard to inventory. We're, we're targeting the promotions in the right places. And we'll, we'll do our best to move through as much of it as we can here in the fourth quarter and put us in the best position as we go forward. But there certainly will be a balance around how much we want to do versus.

Yes, I think it's really the approach is to remain targeted with regard to promotions.

We're not in a position where we need to do this mass fire sale with regard to inventory.

We're targeting our promotions in the right places and we'll we'll do our best to move through as much of it as we can here.

Here in the fourth quarter to put us in the best position as we go forward.

But there certainly will be a balance around how much we want to do versus how much will hold over into next year and then how much other support we can get from our partners with regard to relief fund inventory. So multi pronged approach again I feel like the team is executing really well against it.

Speaker 3: How much we'll hold over into next year and then how much other support we can get from our partners with regard to release on inventory. So multi pronged approach.

Speaker 3: Again, I feel like the team's executing really well against it, and we've made major strides.

Made major strides.

Speaker 7: Thanks. And then secondly, you know, you called out Nike as doing quite well on the footwear side. Can you do is there a positive call out on the apparel side of the business? You'd say, you know, this or a category brand or whatever that that that is doing well in a very difficult situation.

Thanks, and then secondly, you've called out Nike is doing quite well.

On the footwear side.

Is there any positive call out on the apparel side of the business you would say this alright category brand whenever that is doing well in a very difficult situation.

Speaker 3: Yeah, I'd say right now our biggest driving category apparel side is denim. Denim's been a significant focus for us for a number of years. We continue to expand our presence in denim along with adding additional product within the woven categories. Both of those have been exceptional, continue to be a focus for us, and we believe continue to be a differentiator in our business.

I'd say right now our biggest driving category apparel side is denim.

Denim has been a significant focus for us for a number of years, we continue to expand our presence in denim.

Along with that.

Adding additional additional product within their woven category. So both of those have been exceptional continue to be a focus for us.

We believe continue to be a differentiator in our business.

Speaker 7: Thanks. And then, Bob, on the share count, the current, the fourth quarter share count, what number should we be using? And then, I just wanted to know about where you, where everybody stood with the loyalty program as well, as far as new members and percent of, the percent of business.

Thanks, and then.

Bob on the share count the currently the fourth quarter share count what number should we be using.

And then I just.

Wanted to know about where you are.

Where everybody is sort of the loyalty program as well as far as new members and percent of.

The percent of business I might have missed that earlier.

Speaker 4: Yeah, the end of the end of the year share counts approximately 12.6M diluted shares. No, I understand, but.

And at the end of the year share count of approximately $12 6 million diluted shares.

No I understand but Q4 is going to be significantly lower than that.

Speaker 4: Is that like 11.9? Is that a, I mean, that's to get you to just under 12.6. Is that, and we don't, we don't give the specific guides for the quarters. Just you can do the math.

Is that like a 11 nine is that a I mean thats to get you to just under 12.6 is that we don't give the specific guidance for the quarters.

You can do the math on the difference.

Thank you.

And then on the loyalty.

Speaker 2: We saw growth in total active members, so that's anyone who's purchased within the last 12 months, year-to-year. So we're continuing to see big growth there.

Okay loyalty, we saw growth in total active members so that anyone who has purchased within the last 12 months year over year. So we're continuing to see figure out there.

Loyalty is over 60% of sales.

Speaker 2: As far as the breakdown, you know, most of the growth of loyalty in a quarter was driven by existing membership.

As far as the breakdown.

The growth of loyalty in the quarter was driven by existing members shopping.

Speaker 2: When we look at new customers, the number was slightly down, but the sales from new customers was actually up, and that's because of an increase in average sales.

Look at new customers, the number was slightly down but the sales from new customers for this actually.

And that's because of an increase in average ticket.

Thank you very much and happy holidays again.

Thank you.

Speaker 6: Thank you ladies and gentlemen, that does conclude our question and answer session. I'd like to pass the floor back over to management for an additional closing remarks. Well, thank you so much for your time and attention today. We appreciate it. We're pretty proud of the quarter more to come and. Look, going into this holiday season, I'll leave you with the message of you don't have enough sneakers or denim yet. So we'll see you, your family and friends out in the stores this holiday season. Thanks.

Thank you, ladies and gentlemen that does conclude our question and answer session I would like to pass the floor back over to management for any additional closing remarks, well. Thank you. So much for your time and attention today, we appreciate it.

Pretty proud of the quarter more to come in.

Look going into this holiday season, I'll leave you with the message of if you don't have enough sneakers or denim yet. So we will see you your family and friends out in the stores. This holiday season. Thank you.

Speaker 1: Ladies and gentlemen, this does conclude today's teleconference. We thank you for your participation and you may disconnect your lines at this time.

Ladies and gentlemen, this does conclude today's teleconference. We thank you for your participation and you may disconnect your lines at this time.

Speaker 14: © BF-WATCH TV 2021

Hum.

Oh.

Speaker 14: I should say, keep moving forward in life.

Hum.

[music].

Speaker 14: And have.

Okay.

[music].

Okay.

[music].

Speaker 14: Have have and.

Uh-huh.

[music].

Uh-huh.

Yeah.

Speaker 14: that

Hello.

[music].

Sure.

[music].

Hum.

[music].

Okay.

Okay.

Right.

[music].

Speaker 14: The End

Sure.

[music].

Speaker 14: Grow.

Speaker 14: That is.