Q4 2024 Shoe Carnival Inc Earnings Call

Operator: Good morning, and welcome to Shoe Carnival's 4th Quarter 2023 Earnings Conference. Today's conference call is being recorded and is also being broadcast via webcast. Any reproduction or broadcast of any portion of this call is expressly prohibited.

Good morning, and welcome to shoe Carnivals fourth quarter 2023 earnings Conference call. Today's conference call is being recorded and is also being broadcast via webcast.

Any reproduction or rebroadcast of any portion of this call is expressly prohibited.

Steve R. Alexander: I would now like to introduce Mr. Steve Alexander, Shoe. Thank you and good morning. Thanks for joining us earlier this morning. Earnings Press Release for the fourth quarter. If you need a copy of the release, it is available on our website in the Investor section. Joining me on today's call are Mark Worden, President and Chief Executive Officer of Shoe Carnival, Carl Scibetta, Chief Merchandising Officer, and Patrick Edwards, Chief Financial Officer. Managers for ARCS today may contain forward-looking statements that involve a number of risk factors. These risk factors could cause the company's actual results to be materially different from those projected in such statements.

I would now like to introduce Mr. Steve Alexander with shoe Carnival Investor Relations Mr. Isaac Sandra. Please go ahead.

Okay.

Steve R. Alexander: Thank you and good morning, thanks for joining us today.

Steve R. Alexander: Earlier. This morning, we issued our earnings press release for the fourth quarter of 2023.

Speaker Change: If you need a copy of the release it is available on our website in the investors section.

Steve R. Alexander: Joining me on today's call are Mark Worden, President and Chief Executive Officer of Shoe Carnival, Carl Siddhartha, Chief Merchandising Officer, and Patrick Edwards, Chief Financial Officer.

Steve R. Alexander: Managements remarks today may contain forward looking statements that involve a number of risk factors.

Steve R. Alexander: These risk factors could cause the company's actual results to be materially different from those projected in such statements.

Steve R. Alexander: 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. 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 today's press release to reflect future events or developments. Today's call will reference non-GAAP measures. The non-GAAP or adjusted results referenced exclude the purchase accounting, merger, integration, and transaction costs related to the acquisition of Rogan's Shoes. A reconciliation of GAF and non-GAF results is included in this earnings release.

Steve R. Alexander: 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.

Steve R. Alexander: Investors are cautioned not to place undue reliance on these forward looking statements, which speak only as of today's date.

Company disclaims any obligations 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.

Steve R. Alexander: <unk> call will reference non-GAAP measures, the non-GAAP or adjusted results referenced exclude the purchase accounting merger integration and transaction costs related to the acquisition of Rogue is she is.

Steve R. Alexander: A reconciliation of GAAP to non-GAAP results is included in this morning's release and with that I'll hand, the call over to Mark.

Mark J. Worden: And with that, I'll hand the call over to Mark. Thank you, Steve, and good morning, everyone. I'd like to start today by thanking our 5000 team members and vendor partners for their support in driving sales growth during the December holiday period and setting us up for accelerated sales growth in fiscal 2024. Let me also take this opportunity to welcome all our new team members from the Rogan's Shoes acquisition announced last month. One month after the acquisition, it's abundantly clear to me why Rogan's is the market leader in the state of Wisconsin.

Mark J. Worden: Thank you, Steve and good morning, everyone I'd like to start today by thanking our 5000 team members and vendor partners for their support in driving sales growth during the December holiday period, and setting us up for accelerated sales growth in fiscal 2024.

Mark J. Worden: Let me also take this opportunity to welcome all our new team members from the Rogen shoes acquisition announced last month.

Mark J. Worden: One month after the acquisition, it's abundantly clear to me why Rogen is the market leader in the state of Wisconsin their assortment as compelling brands are spot on for the target customer and a long tenured team has a deep commitment to our customers. This combination sets us up for significant profit growth and sales expansion.

Mark J. Worden: Their assortment is compelling, brands are spot-on for the target customer, and the long-tenured team has a deep commitment to their customers. This combination sets us up for significant profit growth and sales expansion ahead. Welcome, team.

Speaker Change: Welcome team.

Mark J. Worden: Before turning to 2024 growth expectations and guidance, I'll start by highlighting Q4 2023 results. First, our results were consistent with the preliminary financials announced in mid-February. We delivered net sales at the high end of our expectation, with $280.2 million in the fourth quarter and $1.176 billion for the year. Excluding the transaction costs incurred in the fourth quarter related to the rovings acquisition, adjusted EPS totaled 59 cents and was in the mid-range of our expectation, and adjusted EPS for the full year totaled $2.70. Sales during the December holiday period exceeded our expectations, with strong gross profit delivery again, sustaining above 35% for the 12th consecutive quarter. We posted mid-single-digit sales growth during the holiday period, with balanced growth across both banners.

Speaker Change: Before turning to 2020 for growth expectations and guidance I'll start with highlighting Q4 2023 results.

Speaker Change: First our results were consistent with the preliminary financials announced in mid February we delivered net sales at the high end of our expectation with $280 2 million in.

Speaker Change: In the fourth quarter, and one $1 76 billion for the year.

Speaker Change: Excluding the transaction cost incurred in the fourth quarter related to the <unk> acquisition adjusted EPS totaled <unk> 59.

Speaker Change: And within the mid range of our expectation and adjusted EPS for the full year totaled $2 70.

Speaker Change: Sales during the December holiday period exceeded our expectations with strong gross profit delivery again sustaining above 35% for the 12th consecutive quarter.

Speaker Change: We posted mid single digit sales growth during the holiday period with balanced growth across both banners.

Mark J. Worden: Our growth was driven by, number one, our new holiday marketing campaign, which surrounded customers during the two peak holiday weeks with a new slate of social, digital, and influencer marketing. The message resonated with our core customers immediately, and number two, Carl's buying team rolled out a compelling holiday assortment with robust margins that our customers wanted on their holiday gifting lists. Between the new campaign and the right brand, right depth, we found the perfect combination to capture customers' share of Wallet when they were ready to shop for the holiday. The wins from the December holiday season were built from the early learnings we captured during our back-to-school campaign, where we grew our children's category sales during the most important season of our year. 2023 was a challenging year overall, with net sales declining versus the prior year.

Speaker Change: Our growth was driven by number one our new holiday marketing campaign, which surrounded customers. During the two peak holiday weeks with a new slate of social digital and Influencer marketing the message resonated with our core customer immediately.

Speaker Change: And number two carl's buying team rolled out a compelling holiday assortment with robust margins that our customers want it for their holiday gifting list between the new campaign and Wright brand right step we found the perfect combination to capture customer share of wallet when they were ready to shop for the holiday.

The wins from the December holiday season were built from the early learnings we captured during our back to school campaign, where we grew our children's category sales during the most important season of our year.

Speaker Change: 2023 was a challenging year overall with net sales declining versus the prior year customers were cautious during the year focused on event driven shopping occasions, and the central footwear purchases.

Mark J. Worden: Customers were cautious during the year, focused on event-driven shopping occasions and essentials. With that said, the team successfully grew market share once again this year within the family footwear industry and rapidly advanced our long-term strategic plan. We delivered successful growth events during both back-to-school and holiday, establishing a compelling approach to incite customers to choose our brands when they are ready to purchase in 2024. We have applied learnings from our go-to-market approach focused on social, digital marketing, and compelling assortments for the 2024 tax refund and early spring season, which I will provide an update on shortly. Gross profit margin in the quarter was 35.6%, which represented the 12th consecutive quarter with a margin of about 35%.

Speaker Change: With that said the team successfully grew market share once again this year within the family footwear industry and rapidly advanced our long term strategic plans we have.

Speaker Change: Delivered successful growth events during both back to school and holiday, establishing a compelling approach to inspire customers to choose our banners when they are ready to purchase in 2024.

Speaker Change: We have applied learnings from our go to market approach focused on social digital marketing and compelling assortments for the 2020 for tax refunds and early spring season, which I will provide an update on shortly.

Speaker Change: Gross profit margin in the quarter was 35, 6%.

Speaker Change: Representing the 12th consecutive quarter above 35%.

Mark J. Worden: Since fiscal 2019, our full-year gross profit margin has expanded by 570 basis points. Margin over the long term has been a key driver of our profit transformation, driven by our targeted promotional plans, smart buying strategies, and growth of our shoe perks PRM membership, which grew to over 34 million members at the end of fiscal 2023. Fourth quarter net income was $15.5 million, or $0.57 per diluted share, compared to fourth quarter 22 net income of $21.6 million, or $0.79 per diluted share. Excluding Rogan's transaction costs in the fourth quarter, adjusted net income was $0.59 per diluted share and $2.70 per diluted share for fiscal 2023. We continued executing our Inventory Optimization Improvement Plan in the quarter and delivered ahead of expectations for the first year of this plan.

Since fiscal 2019, our full year gross profit margin has expanded 570 basis points.

Speaker Change: Margin over the long term has been a key driver of our profit transformation driven by our targeted promotional plans smart buying strategies and growth of our shoe perks CRM membership, which grew to over 34 million members at the end of fiscal 2023.

Speaker Change: Fourth quarter net income was $15 5 million or <unk> 57 per diluted share compared to fourth quarter 'twenty to net income of $21 6 million or <unk> 79 per diluted share excluding.

Speaker Change: Excluding the Rogen is transaction cost in the fourth quarter. Adjusted net income was 59 per diluted share and $2 70 per diluted share for fiscal 2023.

Speaker Change: We continued executing our inventory optimization improvement plan in the quarter and delivered ahead of expectations for the first year of this plan, we reduced inventory levels, while sustaining robust gross profit margins and providing a fresh assortment of branded products for our customers.

Mark J. Worden: We reduced inventory levels while sustaining robust gross profit margins and providing a fresh assortment of branded products for our customers. Our inventory coming out of the year is in a good position, and we expect to continue driving additional efficiencies in 2024. Carl will lay out our 2024 inventory optimization targets in a moment. We're at an all-time high of 429 stores, including the 28 acquired Rogan store locations.

Speaker Change: Our inventory coming out of the year is in a good position and we expect to continue driving additional efficiencies in 2024.

Karl will lay out our 2024 inventory optimization targets in a moment.

We're at an all time high of 429 stores, including the 28 acquired roving store locations.

Mark J. Worden: By the end of fiscal 2024, we expect to operate 430 to 432 stores, resulting in an increase of 30 to 32 stores this year. The new stores that are expected to open in 2024 will be part of our Shoe Station growth banner, contributing to our expectation of sales growth this year. We also continue to modernize our Shoe Carnival fleet, with approximately 60% now complete and additional stores being modernized during 2024. The annual capital investment required for the Modernization Program decreases starting this year as the program nears completion.

Speaker Change: The end of fiscal 2024, we expect to operate 430 to 432 stores, resulting in an increase of 30% to 32 stores. This year.

Speaker Change: The new stores that are expected to open in 2024 will be part of our shoe station growth manner contributing to our expectation of sales growth this year.

Speaker Change: We also continue to modernize our shoe Carnival fleet with approximately 60% now complete and additional stores being modernized during 2024.

Speaker Change: The annual capital investment required for the modernization program decreases starting this year as the program nears completion.

Mark J. Worden: We continue to have a strategic roadmap in place to surpass 500 stores in our fleet in 2028. We plan to achieve this store growth objective through organic new store growth and by pursuing additional M&A targets as profitable opportunities arise. Our balance sheet is strong, with over $110 million in cash and marketable securities on hand at the end of the year.

Speaker Change: We continue to have a strategic roadmap in place to surpass 500 stores in our fleet in 2028.

Speaker Change: We plan to achieve this store growth objective through organic new store growth and by pursuing additional M&A targets as profitable opportunities arise.

Speaker Change: Our balance sheet is strong with over $110 million in cash and marketable securities on hand at the end of the year.

Mark J. Worden: As compared to the prior year, cash and marketable securities increased nearly 50 million dollars, and cash flow from operations increased over 70 million dollars. We continue to fund our strategic investments in the business from operating cash flows, and we carry no debt, and we funded the acquisition of Rogan's with cash flow entirely generated in fiscal 2023. Given the current high interest rate environment, our no debt position puts us in a great place to continue to fund future growth opportunities with cash generated by the business. In March, we raised our quarterly dividend by 12.5% per share.

Speaker Change: As compared to the prior year cash and marketable securities increased nearly $50 million in cash flow from operations increased over $70 million.

Speaker Change: We continue to fund our strategic investments in the business from operating cash flows carrying no debt and we funded the acquisition of Rogen with cash flow entirely generated in fiscal 2023.

Speaker Change: Given the current high interest rate environment are no debt position puts us in a great place to continue to fund future growth opportunities with cash generated by the business.

Speaker Change: In March we raised our quarterly dividend by 12, 5% per share with this recent increase we have now grown our shareholder dividend by 238% since the first quarter of 2019 and provided 48 consecutive quarterly dividend.

Mark J. Worden: With this recent increase, we have now grown our shareholder dividend by 238% since the first quarter of 2019 and provided 48 consecutive quarterly dividends. And in the last 12 months, we've increased our dividend 35%, demonstrating our confidence in delivering growth and further enhancing shareholder returns over the long term. In February, we acquired Rogan's, the second acquisition in Shoe Carnival's history, for a purchase price of $45 million. Founded in 1971, Rogan's is a 53-year-old work and family footwear company with 28 stores in Wisconsin, Minnesota, and Illinois. Importantly, this acquisition provides us market leadership in Wisconsin and expands our presence into Minnesota, our 36th state. Rogans carries over 100 name brands and thousands of styles of footwear for men, women, and children and has a customer base that is complementary to our shoe station banner.

Speaker Change: And in the last 12 months, we've increased the dividend, 35% demonstrating our confidence in delivering growth and further enhancing shareholder returns over the long term.

Speaker Change: In February we acquired <unk>, the second acquisition and shoe carnivals history for a purchase price of $45 million.

Speaker Change: Founded in 1971 revenues with a 53 year old work and family Footwear company with 28 stores in Wisconsin, Minnesota, and Illinois Importantly, this acquisition provides us market leadership in Wisconsin and expands our presence into Minnesota, Our 36 states.

Speaker Change: Brogan carries over 100 named brands and thousands of styles of footwear for men women and children and has a customer base that is complementary with our shoe station banner.

Speaker Change: As previously announced we have an 18 month plan to integrate <unk> into our shoe station growth pattern, which is well underway and I'm pleased with the progress to date.

Speaker Change: <unk> will be immediately accretive to our 2020 for results and we now expect the level of accretion will increase meaningfully in 2025.

Speaker Change: We had initially planned to realize full synergies of approximately $1 5 million at.

Mark J. Worden: As previously announced, we have an 18-month plan to integrate Rogan's into our shoe station growth banner, which is well underway, and I'm pleased with the progress to date. Rogan's will be immediately accretive to our 2024 results, and we now expect the level of accretion will increase meaningfully in 2025. We had initially planned to realize full synergies of approximately $1.5 million at a level that was relatively balanced over the course of fiscal 2025 and fiscal 2026. But, as we announced in our press release this morning, we've now increased the full synergy expectation to $2.5 million. Additionally, we now expect to realize the full synergy amount in fiscal 2025 based on the early, smooth progress of the integration process to date, the strength of Rogan's business, and the opportunities for future growth.

Speaker Change: At a level that was relatively balanced over the course of fiscal 2025 in fiscal 2026.

Speaker Change: But as we announced in our press release. This morning, we've now increased the full synergy expectation to $2 5 million.

Speaker Change: Italy, we now expect to realize the full synergy amount in fiscal 2025 based on the early smooth progress of the integration process to date, the strength of the <unk> business and the opportunities for future growth.

Speaker Change: Moving now to our full year 2020 for outlook.

Speaker Change: We expect to drive significant top line growth in 2020 for sustained strong gross profit margins expand our customer base and begin to strategically integrate the <unk> business.

Speaker Change: From a net sales perspective, the outlook includes the expectation of net sales growth in 2024 led by the <unk> acquisition continued strength in our shoe station growth banner growth in ecommerce and significantly improving sales trends in our shoe Carnival banner net.

Speaker Change: Net sales for 2024 are expected to be in a range of 121 billion to $1, two 5 billion representing growth of approximately 4% to 6%.

Speaker Change: Worth noting fiscal 2024 includes 52 weeks as compared to 53 weeks in fiscal 2023, representing an approximate 1% headwind to growth in 2024 versus 2023.

Mark J. Worden: Moving now to our full year 2024 outlook, we expect to drive significant top-line growth in 2024, sustain strong gross profit margins, expand our customer base, and begin to strategically integrate Rogan's business. From a net sales perspective, the outlook includes the expectation of net sales growth in 2024 led by the Rogan's acquisition, continued strength in our shoe station growth banner, growth in e-commerce, and significantly improving sales trends in our shoe carnival banner. Net sales for 2024 are expected to be in a range of $1.21 billion to $1.25 billion, representing growth of approximately 4% to 6%. Worth noting, fiscal 2024 includes 52 weeks as compared to 53 weeks in fiscal 2023, representing an approximate 1% headwind to growth in 2024 versus 2023.

Comparable store sales are expected to be in a range of down 3% to up 1% versus 2023, representing a significantly improved trend versus prior year, primarily in our shoe Carnival banner.

Speaker Change: Gross profit margin is expected to be approximately even with prior year, reflecting our long term profit transformation strategy and our sustained gross profit margin performance.

Speaker Change: SG&A as a percent of net sales is expected to be approximately 40 basis points higher than fiscal 2023.

Speaker Change: The increase versus prior year led by two primary factors that are important to understand as part of our 2020 for outlook.

Speaker Change: Probably 20 basis points of the SG&A increase is due to expected purchase accounting merger and integration costs related to the <unk> acquisition, Patrick will elaborate shortly.

Patrick C. Edwards: The balance of the increase versus prior year is driven by rogen to operating expenses that are expected to be synergize in fiscal 2025 as part of the accelerated integration plan with.

Patrick C. Edwards: We do not expect to begin realizing synergies on the Robbins operating expenses into late 2024.

Patrick C. Edwards: The income tax rate for fiscal 2024 is expected to be approximately 26%, representing an increase of 230 basis points versus prior year and a negative impact of EPS of approximately eight.

Patrick C. Edwards: Patrick will provide more details in a few moments.

Patrick C. Edwards: In summary, our 2024 expectation is for sales growth gross profit margin that is approximately flat to prior year increased SG&A in the near term and a tax headwind of approximately eight.

Mark J. Worden: Comparable store sales are expected to be in a range of down 3% to up 1% versus 2023, representing a significantly improved trend versus prior year, primarily in our Shoe Carnival banner. Gross profit margin is expected to be approximately even with prior year, reflecting our long-term profit transformation strategy and our sustained gross profit margin performance. SG&A, as a percent of net sales, is expected to be approximately 40 basis points higher than fiscal 2023. The increase versus the prior year is led by two primary factors that are important to understand as part of our 2024 outlook. Practically 20 basis points of the SG&A increase are due to expected purchase accounting, merger, and integration costs related to the Rogan's acquisition. Patrick will elaborate shortly. The balance of the increase versus the prior year is driven by Rogan's operating expenses that are expected to be synergized in fiscal 2025 as part of the accelerated integration plan. We do not expect to begin realizing synergies on Rogan's operating expenses until late 2024.

Patrick C. Edwards: This translates into adjusted EPS in fiscal 2024 or $2 65 at the midpoint of guidance.

Patrick C. Edwards: Patrick will provide additional details on the 2024 outlook, but in terms of the year to date performance. In early 2024, we are seeing encouraging trends as I discussed earlier, we're applying the learnings from our successful August back to school campaign and December holiday season, So winning customers business when they are ready to purchase.

Patrick C. Edwards: In 2024.

Patrick C. Edwards: Using our go to market approach focus on social and digital marketing and compelling products. We are achieving success during the tax refund and early spring season.

Rogen shoe station and E Commerce sales are growing as expected and shoe carnival trends are improving.

We're now halfway through Q1, and I can share that we achieved sales growth in the low to mid single digit range and sustained gross profit margin performance quarter to date.

Patrick C. Edwards: I'm, most encouraged with customers' response to our tax refund and spring sandals season, our marketing campaign and the fresh product assortment.

Patrick C. Edwards: Specifically over the past three weeks of running our new digital first campaign, we've seen our sales accelerate to high single digit growth with a very strong customer response to our spring seasonal offerings across our banners.

Mark J. Worden: The income tax rate for fiscal 2024 is expected to be approximately 26%, representing an increase of 230 basis points versus the prior year and a negative impact on EPS of approximately $0.08. Patrick will provide more details in a few moments. In summary, our 2024 expectation is for sales growth, a gross profit margin that is approximately flat with the prior year, increased SG&A in the near term, and a tax headwind of approximately $0.08. This translates into adjusted EPS in fiscal 2024 of $2.65 at the midpoint of guidance. Metra will provide additional details on the 2024 outlook, but in terms of year-to-date performance in early 2024, we are seeing encouraging trends. As I discussed earlier, we're applying the learnings from our successful August Back to School campaign and December holiday season to win customers' business when they're ready to purchase in 2024.

Patrick C. Edwards: In summary, we delivered net sales at the high end of our fourth quarter expectations led by strong growth during the December holiday period, we delivered profitability in line with our expectations and our results were consistent with our preliminary results announced last month.

Patrick C. Edwards: Our new plans drove growth during the holiday period and are being activated against successfully and early 2024 <unk>.

Patrick C. Edwards: We delivered on our inventory optimization improvement plan ahead of target with inventory levels down product assortment in a good position with additional efficiencies expected in 2024.

Patrick C. Edwards: Our balance sheet is strong with no debt for the 19th consecutive year and we continue to generate solid cash flow and we have the capacity to fund increased shareholder value and future growth opportunities with cash generated by the business.

Patrick C. Edwards: February we completed the <unk> acquisition and funded the deal with cash flow generated in 2023, we have increased the expected synergy realization of $2 $5 million and accelerated the integration plan with the expectation of realizing the full synergies in fiscal 2025.

Patrick C. Edwards: Revenues will be accretive to our results in 2024 and the level of accretion is now expected to increase significantly in 2025 as we expected synergies are realized.

Mark J. Worden: Using our go-to-market approach focused on social and digital marketing and compelling products, we are achieving success during the tax refund and early spring season. Rogans, Shoe Station, and e-commerce sales are growing as expected, and shoe carnival trends are improving. We're now halfway through Q1, and I can share that we achieved sales growth in the low to mid single digit range and sustained gross profit margin performance quarter to date. I'm most encouraged by customers' response to our tax refund and spring sandal season and marketing campaign and the fresh product assortment.

Patrick C. Edwards: Our 2024 outlets demonstrates our expectation for net sales growth and sustained profitability performance with the top line growth led by <unk> the strength of our shoe station banner growth in ecommerce sales and significantly improving trends in our shoe Carnival banner.

Speaker Change: Before handing it over to Carl I would like to close with some perspective on our long term performance.

Speaker Change: We have experienced solid net sales growth and transformation of profitability growth. Since 2019 led by our acquisition strategy, our investments in CRM and e-commerce modernization as well as our targeted promotional strategies.

Speaker Change: Since 2019 earnings per share have increased 84%, representing an EPS CAGR of 16%.

Speaker Change: Over the same period gross profit margin has expanded 570 basis points and sales has grown 13%.

Mark J. Worden: Specifically, over the past three weeks of running our new Digital First campaign, we've seen our sales accelerate to high single-digit growth with a very strong customer response to our spring seasonal offering across our banner. In summary, we delivered net sales at the high end of our fourth quarter expectations, led by strong growth during the December holiday period. We delivered profitability in line with our expectations, and our results were consistent with the preliminary results announced last month.

Speaker Change: Our strategy to grow sales and increase profitability over the long term have put us in a strong competitive position to continue growing market share in 2024 and beyond our.

Speaker Change: Our long term vision is clear to be the nation's leading family footwear retailer and I believe we are well positioned to continue advancing towards that ambition in 2024.

Speaker Change: And now I'll hand, it over to Karl to provide further color on the quarter and our categories performance call.

Karl: Thank you Mark I would like to begin by setting up the customer backdrop during the quarter similar to previous quarters to families to our customer continues to be cautious with their purchases our customers continued to focus on value and theyre, making more of their footwear purchases during the event driven period.

Mark J. Worden: Our new plans drove growth during the holiday period and are being activated again successfully in early 2024. We delivered on our inventory optimization improvement plan ahead of target with inventory levels down, and product assortment in a good position with additional efficiencies expected in 2024. Our balance sheet is strong, with no debt for the 19th consecutive year end.

Karl: Such as the December holiday season this quarter.

We saw this customer behavior play out in our results for Q4 and more specifically in our strong performance during the December holiday season.

Mark J. Worden: We continue to generate solid cash flow, and we have the capacity to fund increased shareholder value and future growth opportunities with cash generated by the business. In February, we completed the Rogan's acquisition and funded the deal with cash flow generated in 2023. We have increased the expected synergy realization to $2.5 million and accelerated the integration plan with the expectation of realizing the full synergies in fiscal 2025. Rogens will be accretive to our results in 2024, and the level of accretion is now expected to increase significantly in 2025 as the expected synergies are realized.

Speaker Change: I'll provide more details on our category performance for the quarter later, but first I would like to highlight our performance during the holiday season.

Speaker Change: As Mark discussed our performance was strong as we built on the learnings from our successful back to school performance earlier in the year. Our strategy included a new holiday marketing campaign, which included social digital and Influencer messaging, we rolled out a compelling holiday assortment provide.

Speaker Change: Exceptional value on key products and items that our customers want it for their holiday gift list and our in store execution was outstanding.

Mark J. Worden: Our 2024 outlet demonstrates our expectation for net sales growth and sustained profitability performance, with top-line growth led by Rogan's, the strength of our Shoe Station banner, growth in e-commerce sales, and significantly improving trends in our Shoe Carnival banner. Before handing it over to Carl, I would like to close with some perspective on our long-term performance. We've experienced solid net sales growth and transformational profitability growth since 2019, led by our acquisition strategy, our investments in CRM and e-commerce modernization, as well as our targeted promotional strategy. Since 2019, Earnings Per Share have increased 84%, representing an EPS CAGR of 16%.

Speaker Change: All strategies that we are replicating successfully during the tax refund season in early spring and we will build on these strategies, even further for Easter and back to school 2024.

Speaker Change: Our comp sales for the two week holiday period increased mid single digits led by total athletics, which were up low teens non aesthetics also performed well down only low single digits.

Speaker Change: Continuing with the December holiday season, we grew total children's low single digit or total men's category was flat to slightly up during the holiday period, and total women's was down low single digits or.

Speaker Change: Our marketing strategies drove demand.

Speaker Change: Merchandize assortment modernized fully staffed stores and easier to shop ecommerce platforms provided the right backdrop for our customers to purchase during the holidays.

Mark J. Worden: Over the same period, gross profit margin expanded 570 basis points, and sales grew 13%. Our strategies to grow sales and increase profitability over the long term have put us in a strong competitive position to continue growing market share in 2024 and beyond. Our long-term vision is clear to be the nation's leading family footwear retailer, and I believe we are well positioned to continue advancing toward that ambition in 2024. And now I'll hand it over to Carl to provide further color on the quarter and our category of performance.

Speaker Change: Now moving to the quarter.

Speaker Change: Competitive intensity continues to be high.

Speaker Change: With aggressive promotional activity on seasonal merchandise all the way through January we delivered gross profit margin above 35% for the 12 consecutive quarter and we remain committed to our profit transformation and targeted CRM strategy to continue delivering sustained gross profit margin performance.

Speaker Change: Our merchandise margins second quarter decreased by 170 basis points versus prior year, primarily due to increased promotional activity on seasonal merchandise.

Carl N. Scibetta: Thank you, Mark. I would like to begin by setting up the customer backdrop for the quarter. Similar to previous quarters, the families of our customers continue to be cautious with their purchases. Our customers continue to focus on value, and they are making more of their footwear purchases during event-driven periods, such as the December holiday season this quarter. We saw this customer behavior play out in our results for Q4 and more specifically in our strong performance during the December holiday season. I'll provide more details on our category performance for the quarter later, but first, I would like to highlight our performance during the holiday season. As Mark discussed, our performance was strong as we built on the learnings from our successful back-to-school performance earlier in the year. Our strategy included a new holiday marketing campaign that included social, digital, and influencer messaging.

Speaker Change: For a long term perspective compared to four years ago.

Speaker Change: Q4, 2019, our merchandize margin and have significantly expanded our approximately 750 basis points in the quarter demonstrating the success of our long term profit transformation strategy and the ability to leverage our advanced CRM capabilities and analytics to inform our promotional.

Speaker Change: <unk>.

During the fourth quarter, we continued to further optimize our inventory levels and we finished the year ahead of our target inventory at the end of the year was lowered by approximately 11% on a dollar basis than prior year and on a unit basis total inventory was down 15% versus prior year.

Speaker Change: Here, our inventory counting is clean and we continued to manage inventory slow to ensure our stores are stocked with the product offerings that our customers want.

Carl N. Scibetta: We rolled out a compelling holiday assortment, providing exceptional value on key products and items that our customers wanted for their holiday gifts, and our in-store execution was outstanding, all strategies that we are replicating successfully during tax refund season and early spring. And we will build on these strategies even further for Easter and back to school 2022. Our comp sales for the two-week holiday period increased mid-single digits, led by total athletics, which were up low teens. Non-athletics also performed well, down only low single digits.

Speaker Change: As we continue to execute our inventory strategy in 2024, we expect to generate additional efficiencies and further optimize our inventory.

Speaker Change: Excluding the impact of Robbins.

Speaker Change: We expect fiscal 2020 for year end inventory to be approximately $20 million or 5% lower than fiscal 2023 year end, while maintaining the freshest product assortment for our customers.

Now moving to sales in categories for the quarter.

Speaker Change: Total Q4 comp sales were down nine, 4%, which reflected an event driven shopping with lower traffic prior to the December holiday period, and disruptions due to weather in January as I discussed earlier, our December holiday performance was very successful with strong growth in adult athletics.

Carl N. Scibetta: Continuing with the December holiday season, we grew total children's low single digit. Our total men's category was flat to slightly up during the holiday period, and total women's was down low single digit. Our marketing strategy stroke demand. Our merchandise assortment, modernized, fully staffed stores, and easy-to-shop e-commerce platforms provided the right backdrop for our customers to purchase during the house. Moving to the quarter, competitive intensity continued to be high, with aggressive promotional activity on seasonal merchandise all the way through January.

Well as children and demonstrates our ability to meet customers' needs when they are ready to purchase.

Speaker Change: On a category perspective for the quarter children's comps sales were down mid single digits with athletic flat and non athletic was down mid teens.

Speaker Change: The strong performance of children's Athletic is led by basketball court the <unk>.

Speaker Change: Children's non athletic performance was primarily softness in boots.

Speaker Change: Comp sales in both mens and womens adult athletics were down high singles with better performance in November and December offset by slower performance in January.

Carl N. Scibetta: We delivered gross profit margin above 35% for the 12th consecutive quarter and remain committed to our profit transformation and targeted CRM strategies to continue delivering sustained gross profit margin performance. Our merchandise margin for the quarter decreased by 170 basis points versus the prior year, primarily due to increased promotional activity on seasonal merchandise. For a long-term perspective, compared to four years ago, in Q4 2019, our merchandise margin significantly expanded by approximately 750 basis points in the quarter, demonstrating the success of our long-term profit transformation strategy and the ability to leverage our advanced CRM capabilities and analytics to inform our promotional strategy. During the fourth quarter, we continued to further optimize our inventory lock, and we finished the year ahead of our chart and the rest of the industry.

Fourth quarter comp sales in womens non athletic footwear were down low double digits with each interest down mid teens standings were down low teens and support was down low single digits and casuals were down mid teens in the quarter.

Speaker Change: Mens non athletic comp sales were down low double digits dress was down high teens was down high singles in casuals down low double digits and casuals are declining Kansas was partially offset by growth in slip ons.

Speaker Change: To summarize our business performed well during the December holiday season rain sales mid single digits total S. Lynch grew low teens for the holiday period led by strong performance in adults.

Speaker Change: Getting non event periods topline performance softened as price conscious consumers continued to focus their footwear purchases towards event driven periods.

Speaker Change: Turning now to thoughts on 2024.

Carl N. Scibetta: If we continue to execute our inventory strategy in 2024, we expect to generate additional efficiencies and further optimize our inventory, excluding the impact of Rogan. We expect fiscal 2024 year-end inventory to be approximately $20 million or 5% lower than fiscal 2023 year-end, while maintaining the freshest product assortment for our customers. Now, moving to sales and categories for the quarter. Total Q4 comp sales were down 9.4%, which reflected adventure and shopping, with lower traffic prior to the December holiday period and disruptions due to weather in January. As I discussed earlier, our December holiday performance was very successful with strong growth in adult athletics as well as children's and demonstrates our ability to meet customers' needs when they are ready to purchase. From a categories perspective for the quarter, children's comp sales were down mid single digits, with athletics flat, and non-athletics down mid-team. The strong performance of children's athletics was led by basketball and court. The children's non-athletic performance was primarily softness in boots.

Speaker Change: Our boot inventory is in a good position going into the year downtime 'twenty on a unit basis compared to prior year as discussed last quarter with our best in class vendor relationships. We are in a good position to be flexible with our boot inventory and manage it effectively within the backdrop of a challenging weather.

Speaker Change: Demand environment in the quarter, we continued optimizing our inventory and delivered ahead of target our inventory content and mix are both in a good position and we will continue to further execute our inventory optimization improvement plan in 2024.

Speaker Change: We remain committed to our profit transformation and targeted CRM strategies. We are excited about the fresh new products that are coming into our stores in early 2024.

Speaker Change: Flow of seasonal product is much better than prior year and the newness in athletic is performing well.

Speaker Change: We're also very excited about our erosions acquisition and opportunities to grow the business as we have successfully done with our shoes station banner over the last couple of years, we look forward to pursuing growth in the upper Midwest with revenues and engaging with the customer base that is very complementary to our shoe station customer base.

Speaker Change: Yes.

Speaker Change: And with the learnings from our successful Dcfs in December holiday performances. We are building further on the marketing strategy to engage with our customers as we are seeing encouraging performance during the tax refund season in early spring.

Carl N. Scibetta: Comp sales in both men's and women's adult athletics were down high single digits, with better performance in November and December, offset by slower performance in January. Four quarter comp sales in women's non-athletic footwear were down low double digits, with boots and dress down mid-team, dendles were down low teens, and Sport was down low single digit.

Speaker Change: And with that I will turn the call over to Patrick for a review of our financials Patrick.

Patrick C. Edwards: Thanks, Carl moving onto our financial results, starting with topline our net sales in Q4 were $280 2 million.

Carl N. Scibetta: And Casuals were down mid-teens in the, Men's non-athletic comp cells were down low double digits, Dress was down high teens, boot was down high singles, and casuals were down low double digits. And casuals, a declining canvas, was partially offset by growth and slip-on. To summarize, our business performed well during the December holiday season, growing sales mid-single business. Totalist led through low teens for the holiday period, led by strong performance in adults. During non-event periods, top line performance softened as price-conscious consumers continued to focus their footwear purchasing and the, Turning now to thoughts on 2025. Our boot inventory is in a good position going into the year, down high 20s on a unit. As discussed last quarter, with our best-in-class vendor relationships, we are in a good position to be flexible with our boot inventory and manage it effectively within the backdrop of a challenging weather and demand environment.

Patrick C. Edwards: This was down three 6% versus the prior year net sales in the quarter were at the high end of our expectations led by strong performance during the December holiday period, and the benefit of the 50 <unk> week in the quarter.

Patrick C. Edwards: On our banner basis, our shoe station banner total sales for Q4 came in at a low teen increase versus the prior year on the strength of new stores and E Commerce sales and our shoe Carnival banner total sales came in at a mid single digit decline for the quarter.

Patrick C. Edwards: On a comparable store basis, which excludes the impact of the extra week and new store growth companywide sales were down nine 4% for fourth quarter and in line with our expectation.

Patrick C. Edwards: The lower sales were primarily driven by soft trends prior to the December holiday peak period and impacts from weather disruption, resulting in store closures for a couple of weeks across multiple geographies in January.

Patrick C. Edwards: As Mark and Karl discussed our results during the peak December holiday period were strong with mid single digit comparable sales growth led by athletics.

Patrick C. Edwards: Q4 gross profit margin was 35, 6%, marking the 12th consecutive quarter that our gross profit margin has exceeded 35% compared to Q4 2022 gross profit margin was down 270 basis points with merchandise margins decreasing 170 basis.

Carl N. Scibetta: In the quarter, we continued optimizing our inventory and delivered ahead of target. Our inventory content and mix are both in a good position, and we will continue to further execute our inventory optimization improvement plan in 2022. We remain committed to our profit transformation and targeted CRM strategies. We are excited about the fresh new products that are coming into our stores in early 2024. The flow of seasonal products is much better than the previous year, and newness in athletics is performing well.

Patrick C. Edwards: Points, reflecting increased promotions on seasonal merchandise during the quarter.

Patrick C. Edwards: Buying distribution and occupancy costs were higher in the quarter, primarily due to increased rent associated with operating more stores, partially offset by lower freight and distribution costs.

Patrick C. Edwards: In the quarter <unk>, Deleveraged 100 basis points on the lower sales.

Patrick C. Edwards: SG&A expense in Q4 was $79 7 million, representing a decrease of $2 9 million versus Q4 2022.

Patrick C. Edwards: We're also very excited about our Rogan's acquisition and opportunities to grow the business as we have successfully done with our shoe station banner over the last couple of years. We look forward to pursuing growth in the Upper Midwest with Rogan's and engaging with the customer base that is very complementary to our Shoe Station customer base, and with the learnings from our successful BTS and December holiday performances, we are building further on the marketing strategies to engage with our customers as we are seeing encouraging performance during the tax refund season at early, and with that, I will turn the call over to Patrick for a review of our financial performance. Thanks Carl. Moving on, to our financial results. Starting with the top line, our net sales in Q4 were $280.2 million.

Patrick C. Edwards: Q4, SG&A included approximately $800000 in transaction costs related to the Rogen is acquisition and otherwise declined on lower selling expenses in the quarter.

Patrick C. Edwards: On a GAAP basis, our net income for fourth quarter, 2023 was $15 5 million or <unk> 57 per diluted share on a non-GAAP basis, excluding the <unk> related transaction costs. Adjusted net income for fourth quarter was $16 1 million or <unk>.

Patrick C. Edwards: 59 per diluted share.

Patrick C. Edwards: Net sales for full year 2023 were $1 176 billion.

This was down six 8% versus prior year and down eight 8% on a comparable store basis.

Patrick C. Edwards: For full year 2023, net income on a GAAP basis totaled $73 3 million or $2 68 per diluted share and net income on a non-GAAP basis totaled $74 million or $2 70 per diluted share at the midpoint of guidance.

Patrick C. Edwards: This was down 3.6% versus the prior year. However, net sales in the quarter were at the high end of our expectations, led by strong performance during the December holiday period and the benefit of the 53rd week in the quarter. On a banner basis, our Shoe Station banner total sales for Q4 came in at a low teen increase versus the prior year on the strength of new stores and e-commerce sales, and our Shoe Carnival banner total sales came in at a mid-single digit decline for the quarter. On a comparable store basis, which excludes the impact of the extra week and new store growth, company-wide sales were down 9.4% for the fourth The lower sales were primarily driven by soft trends prior to the December holiday peak period and impacts from weather disruption resulting in store closures for a couple of weeks across multiple geographies in January.

Patrick C. Edwards: Taking a long term perspective, it's worth re emphasizing that over the last four years ending with fiscal 2023, we have delivered a 16% EPS CAGR led by gross profit margin expansion of 570 basis points and net sales growth of 13% since 2019.

Patrick C. Edwards: To further support shareholder value in March we raised our dividend by 12, 5% to $13 five per share representing an increased annualized dividend rate of 54 per share. We have now provided a dividend for 48 consecutive quarters and this is the 10th consecutive year.

Patrick C. Edwards: As Mark and Carl discussed, our results during the peak December holiday period were strong, with mid-single-digit comparable sales growth led by athletics. Q4 gross profit margin was 35.6%, marking the 12th consecutive quarter that our gross profit margin has exceeded 35%. Compared to Q4 2022, gross profit margin was down 270 basis points, with merchandise margins decreasing 170 basis points, reflecting increased promotions on seasonal merchandise during the quarter. Buying, distribution, and occupancy costs were higher in the quarter, primarily due to increased rent associated with operating more stores.

Patrick C. Edwards: We have increased that dividend.

Patrick C. Edwards: During the quarter, we didn't repurchase any shares and have $50 million available under our current share repurchase program.

Patrick C. Edwards: At the end of 2023, we had total cash cash equivalence and marketable securities of approximately $110 million.

Patrick C. Edwards: Cash and cash equivalents increased over $47 million versus 2023, and full year 2023 cash flow from operations increased over $72 million versus full year 2022.

Patrick C. Edwards: Now moving on to the 2024 outlook, which builds on our long term sales growth and profit transformation led by our acquisition strategy higher ecommerce sales and sustained gross profit margin performance.

Patrick C. Edwards: The outlook for fiscal 2024, net sales demonstrates our expectation for growth led by our recent Rogen acquisition continued strength in our shoe station banner growth from ecommerce sales combined with the expectation of improving trends at our shoe Carnival banner.

Patrick C. Edwards: Partially offset by lower freight and distribution costs. In the quarter, BD&O deleveraged 100 basis points on the lower sells. SG&A expense in Q4 was $79.7 million, representing a decrease of $2.9 million versus Q4 2022.

Patrick C. Edwards: Net sales are expected to be in a range of $1 to 1 billion to 125 billion representing growth of 4% to 6%.

Patrick C. Edwards: Q4 SG&A included approximately $800,000 in transaction costs related to the Rogan's acquisition and otherwise declined on lower selling expenses in the quarter. On a GAAP basis, our net income for the fourth quarter 2023 was $15.5 million, or $0.57 per diluted share. On a non-GAAP basis, excluding the Rogan's related transaction costs, adjusted net income for the fourth quarter was $16.1 million, or $0.59 per

Patrick C. Edwards: Comparable store sales are expected to be in a range of down 3% to up 1% versus fiscal 2023, representing an improving trend versus the prior year, primarily driven by our shoe Carnival banner.

Patrick C. Edwards: Gross profit margin is expected to be approximately even with fiscal 2023, reflecting our advanced CRM capabilities and targeted promotional strategies that are expected to sustain gross profit margin performance.

Patrick C. Edwards: SG&A as a percent of net sales is expected to be approximately 40 basis points higher than fiscal 2023.

Approximately 20 basis points of that increase is due to expected purchase accounting transaction and integration costs related to the Rogen is acquisition and the remaining balance of the increase is primarily due to the approximate $2 5 million of operating expenses that are expected to be synergize in fiscal 2025.

Patrick C. Edwards: Net sales for full year 2023 were $1.176 billion. This was down 6.8% versus the prior year and down 8.8% on a comparable store basis. For full year 2023, net income on a GAAP basis totaled $73.3 million or $2.68 per diluted share, and net income on a non-GAAP basis totaled $74 million or $2.70 per diluted share at the midpoint of our guidance.

Patrick C. Edwards: As part of our integration of <unk>.

Patrick C. Edwards: As Mark discussed we are encouraged by the integration process to date and have increased the expected synergies related to <unk> from $1 5 million to $2 5 million and expect them to be realized in full in fiscal 2025, we.

Patrick C. Edwards: We now see increased opportunities for synergies in such areas as ecommerce operations as well as leveraging our scale and supply chain buying and in back office SG&A areas, such as duplicative services insurance technology providers to capture those cost efficiencies.

Patrick C. Edwards: Taking a long-term perspective, it's worth reemphasizing that over the last four years ending with fiscal 2023, we have delivered a 16% EPS CAGR, led by gross profit margin expansion of 570 basis points and net sales growth of 13% since 2019. To further support shareholder value, in March, we raised our dividend by 12.5% to $0.135 per share, representing an increased annualized dividend rate of $0.54 per share. We have now provided a dividend for 48 consecutive quarters, and this is the 10th consecutive year we have increased that dividend. During the quarter, we didn't repurchase any shares, and we have $50 million available under our current share repurchase program.

Patrick C. Edwards: We do not expect to begin realizing any meaningful synergies until late 2024.

Patrick C. Edwards: As previously announced in fiscal 2024, we expect rogen is to generate approximately $84 million in net sales and it will be accretive to our results in 2024.

Patrick C. Edwards: After full synergies are realized we now expect <unk> to generate approximately $11 million in operating income in 2025.

Patrick C. Edwards: Our tax rate for fiscal 2024 is expected to be approximately 26%, representing an increase of 230 basis points versus fiscal 2023, and a negative impact to EPS of approximately <unk> <unk>.

Patrick C. Edwards: This higher rate primarily reflects the expectation of a lower benefit in fiscal 2024 from share settled equity awards and prior year state deferred tax benefits that are not expected to recur in fiscal 2024.

Patrick C. Edwards: At the end of 2023, we had total cash, cash equivalents, and marketable securities of approximately $110 million. Cash and Cash Equivalents increased over $47 million versus 2022, and Full Year 2023 Cash Flow from Operations increased over $72 million versus Full Year 2022. Now moving on to the 2024 outlook, which builds on our long-term sales growth and profit transformation led by our acquisition strategy, higher e-commerce sales, and sustained gross profit margin performance. The outlook for fiscal 2024 net sales demonstrates our expectation for growth led by our recent Rogan's acquisition, continued strength in our Shoe Station banner, growth from e-commerce sales, combined with the expectation of improving trends at our Shoe Carnival banner. Net sales are expected to be in a range of $1.21 billion to $1.25 billion, representing growth of 4% to 6%.

Patrick C. Edwards: For fiscal 2020 for GAAP EPS is expected to be in a range of $2 50.

Patrick C. Edwards: To do dollars 70 per share inclusive of the <unk> <unk> tax headwind a standard 52 weeks of net sales, which is an approximately $15 million negative impact to net sales.

Patrick C. Edwards: And the expectation of approximately $2 million of Brogan related purchase accounting transaction and integration costs.

Patrick C. Edwards: non-GAAP, EPS, which excludes those expected purchase accounting transaction and integration costs related to the <unk> acquisition is expected to be in a range of $2 55.

Patrick C. Edwards: To $2 75.

Patrick C. Edwards: Representing a midpoint of $2 65.

Patrick C. Edwards: As part of our continuing inventory optimization improvement plan, we expect inventory excluding the impacts from the <unk> acquisition at the end of fiscal 2024 to be lower by approximately $20 million or 5% versus fiscal 2023 year end, which will put our shoe Carnival banner.

Patrick C. Edwards: Comparable store sales are expected to be in a range of down 3% to up 1% versus fiscal 2023, representing an improving trend versus the prior year, primarily driven by our Shoe Carnival banner. Gross profit margin is expected to be approximately even with fiscal 2023, reflecting our advanced CRM capabilities and targeted promotional strategies that are expected to sustain gross profit margin performance. SG&A as a percent of net sales is expected to be approximately 40 basis points higher than fiscal 2023. Approximately 20 basis points of that increase are due to expected purchase accounting, transaction, and integration costs related to the Rogan's acquisition.

Patrick C. Edwards: Tori at the end of fiscal 2024 in line with inventory levels at the end of fiscal 2019, while maintaining the best assortment of products for our customers.

Patrick C. Edwards: Total capital expenditures are expected to be in a range of $25 million to $35 million in fiscal 2024 and lower than the prior year as our shoe Carnival fleet modernization program nears completion.

Patrick C. Edwards: And our 2024 outlook, we've taken into consideration the dynamic customer purchasing trends and behaviors such as event driven shopping and the purchase of the central footwear.

Patrick C. Edwards: Trends are encouraging as sandal merchandise is selling better than last year, we will gain additional insights about non peak consumer sentiment after Easter and before going into back to school.

Patrick C. Edwards: Also I would like to point out a couple of key phasing considerations in our fiscal 2024 versus the prior year fiscal.

Patrick C. Edwards: And the remaining balance of the increase is primarily due to the approximate $2.5 million of operating expenses that are expected to be synergized in fiscal 2025 as part of our integration of Rogan. As Mark discussed, we are encouraged by the integration process to date and have increased the expected synergies related to Rogan from 1.5 million to 2.5 million and expect them to be realized in full in fiscal 2025. We now see increased opportunities for synergies in such areas as e-commerce operations, as well as leveraging our scale in supply chain, buying, and in back office SG&A areas, such as duplicate services, insurance, and technology providers, to capture those cost efficiencies. However, we do not expect to begin realizing any meaningful synergies until late 2024.

Patrick C. Edwards: Fiscal 2023 included the 50 <unk> week that will not recur in 2024 impacting fourth quarter net sales comparison to 2023 by approximately $15 million.

Patrick C. Edwards: And as a result of the 50 <unk> week in fiscal 2023, the calendar weeks in each quarter will shift this shift will be meaningful in the second quarter and third quarters of 2024.

Patrick C. Edwards: Our highest volume back to school sales week will shift from Q3 in the prior year and will be included in our Q2 results for fiscal 2024. The impact of this shift will be approximately $25 million and result in expected growth in Q2, 2024, and a decline versus the prior year.

Patrick C. Edwards: In Q3 2024.

Patrick C. Edwards: Despite the shift the combined total of Q2 and Q3 sales growth in 2024 versus the prior year is expected to be in line with our full year outlook of 4% to 6% net sales growth.

Patrick C. Edwards: As previously announced, in fiscal 2024, we expect Rogan's to generate approximately $84 million in net sales, and it will be accretive to our results in 2024. After full synergies are realized, we now expect Rogan's to generate approximately $11 million in operating income in 2025. Our tax rate for fiscal 2024 is expected to be approximately 26%, representing an increase of 230 basis points versus fiscal 2023 and a negative impact on EPS of approximately 8 cents. This higher rate primarily reflects the expectation of a lower benefit in fiscal 2024 from share settled equity awards and prior year state deferred tax benefits that are not expected to recur in fiscal 2024.

Patrick C. Edwards: With regard to the first quarter 2024, as Mark discussed we have achieved low to mid single digit net sales growth to date, driven by our spring seasonal and tax refund marketing campaign our.

Patrick C. Edwards: Our current campaign modernized stores and product assortment is currently driving and capturing demand.

Patrick C. Edwards: Overall for Q1 2024, we expect sales growth to remain in that low to mid single digit range and consistent with our annual 2024 outlook. We expect sustained gross profit margin higher operating expenses and a higher tax rate in the first quarter of 2024 compared to.

Patrick C. Edwards: Last year.

Patrick C. Edwards: Our topline growth is therefore expected to result in first quarter EPS that is approximately flat compared to the <unk> 60 per share earned in the first quarter of 2023.

Patrick C. Edwards: Our balance sheet is strong and our cash flow is steady which positions us to fund internal growth execute on M&A opportunities and most importantly, the continued ability to deliver long term shareholder return.

Patrick C. Edwards: For fiscal 2024, GAAP EPS is expected to be in a range of $2.50 to $2.70 per share, inclusive of the $0.08 tax headwind, a standard 52 weeks of net sales, which is an approximately $15 million negative impact on net sales, and the expectation of approximately $2 million of Rogan's related purchase accounting, transaction, and integration costs. Non-GAAP EPS, which excludes expected purchase accounting, transaction, and integration costs related to the Rogan's acquisition, is expected to be in a range of $2.55 to $2.75, representing a midpoint of $2.65. As part of our continuing inventory optimization improvement plan, we expect inventory, excluding the impacts from the Rogan's acquisition, at the end of fiscal 2024 to be lower by approximately $20 million, or 5% versus fiscal 2023 year-end, which will put our Shoe Carnival banner inventory at the end of fiscal 2024 in line with inventory levels at the end of fiscal 2019, while maintaining the best assortment of products for our customers.

Patrick C. Edwards: We also announced today that April 24, 2024 has been set as the shareholder of record date for our annual shareholders meeting.

Patrick C. Edwards: That meeting will be held on June 25, 2024.

Speaker Change: This concludes our financial review now we would like to open the call up for questions operator.

Speaker Change: Thank you if you have a question. Please press star one on your telephone keypad.

Speaker Change: If you wish to remove yourself from the queue simply press star one again.

Speaker Change: And the answer at this time, we ask that you. Please limit yourself to one question and one follow up question.

Speaker Change: If you have any additional questions you may rejoin the queue.

Speaker Change: One moment for your first question.

Mitchel John Kummetz: Your first question comes from the line of Mitch formats.

Research Your line is open.

Mitch: Yes, thanks for taking my questions.

Mitch: My first question has to do with the first quarter.

Mitch: I appreciate all the commentary around quarter to date sales and <unk> sales guidance, but.

Patrick C. Edwards: Total capital expenditures are expected to be in a range of $25 million to $35 million in fiscal 2024 and lower than the prior year as our Shoe Carnival fleet modernization program nears completion. In our 2024 outlook, we have taken into consideration dynamic customer purchasing trends and behaviors, such as event-driven shopping and the purchase of essential footwear. Current trends are encouraging as sandal merchandise is selling better than last year. We will gain additional insights about non-peak consumer sentiment after Easter and before going back to school. Also, I would like to point out a couple of key phasing considerations in our fiscal 2024 versus the prior year. Fiscal 2023 included the 53rd week that will not recur in 2024, impacting fourth quarter net sales comparison to 2023 by approximately $15 million, and as a result of the 53rd week in fiscal 2023, the calendar weeks in each quarter will shift.

Given the acquisition of Brogan.

Research: <unk> is really apples to apples can you say, what the comp quarter to date and what comp is embedded in your Q1 Guide and then also on one Q.

Research: You talked a little bit about the impact of weather and kind of how you see that.

Research: Going forward too.

Research: To the extent that we've used a little bit more cold weather coming and then I do have a follow up.

Research: Hi, Matt it's mark Thanks for joining Tonight. So let me start with sales growth for Q1 is achieved right in that low single digit range. We're very encouraged we are starting to spring campaign and tax must campaign three weeks ago activating the learnings from holiday in Bts.

Mark J. Worden: And it's working very well for the last three weeks for the company have accelerated quickly and specifically we're in the high single digit sales growth range for the three weeks since the campaign started and it's accelerating even faster as we look into March and that weather turns favorable for spring samples.

Patrick C. Edwards: This shift will be meaningful in the second quarter and third quarters of 2024. Our highest volume back-to-school sales week will shift from Q3 in the prior year and will be included in our Q2 results for fiscal 2024. The impact of this shift will be approximately $25 million and result in expected growth in Q2 2024 and a decline versus the prior year in Q3 2024.

Mark J. Worden: We're not just aggregating comps at this point, but I can give you a broad comment all banners are growing in March.

Mark J. Worden: We're very pleased with the strong growth acceleration and shoe station or E. Commerce is accelerating like we had expected in our guidance Brogan is delivering where we had hoped for our guidance and I think everyone wants to hear what we're most pleased with shoe carnival is accelerating rapidly.

Patrick C. Edwards: Despite the shift, the combined total of Q2 and Q3 sales growth in 2024 versus the prior year is expected to be in line with our full year outlook of 4% to 6% net sales growth. With regard to the first quarter of 2024, as Mark discussed, we have achieved low to mid-single digit net sales growth to date, driven by our spring seasonal and tax refund marketing campaign. Our current campaign, Modernize Stores and Product Distortion, is currently driving and capturing demand. Overall, for Q1 2024, we expect sales growth to remain in that low to mid-single-digit range, and consistent with our annual 2024 outlook, we expect sustained gross profit margin, higher operating expenses, and a higher tax rate in the first quarter of 2024 compared to last year.

Mark J. Worden: Sure Carnival is also growing for the months of March and we're seeing strong results in the campaign. So while we're not going to breakout comps per se on our banner level I hope that helps give commentary every part of the business is responding fast favorably and in growth as we get into this campaign season.

Mark J. Worden: Regards to the weather.

Mark J. Worden: We're confident in March I mean, we can't predict if we got a crazy snowstorm in the upper Midwest, but our comps are easier in the March April timeframe versus a very challenging disappointing spring season last year, we expect March to be strong as I said, we've continued to accelerate sales in the high <unk>.

Mark J. Worden: Goals for.

Mark J. Worden: For the three weeks of the campaign and it's accelerated from there if I just look at the months of March So we feel very confident in March.

Patrick C. Edwards: Our top line growth is therefore expected to result in first quarter EPS that is approximately flat compared to the 60 cents per share earned in the first quarter of 2023. Our balance sheet is strong and our cash flow is steady, which positions us to fund internal growth, execute on M&A opportunities, and, most importantly, the continued ability to deliver long-term shareholder returns. We also announced today that April 24th, 2024 has been set as the shareholder of record date for our annual shareholders meeting. That meeting will be held on June 25, 2024.

Speaker Change: What kind of an important topic for all and I'll address it right now.

<unk> has given us a broad range in our comp from a down three to a plus one we're still not clear yet if the consumer is going to be cautious as we get past Easter early spring holiday season, and the event period and until we get to back to school. So we have a wide range there, particularly on the shoe carnival.

Speaker Change: Connor.

Until we see how the consumer responds. After this event what will that look like and as it relates to the four point range and that range is largely and shoe carnival.

Operator: This concludes our financial review. Now we would like to open the call up for questions. Operator?

Speaker Change: That's helpful and my follow up maybe for Carl.

Connor: You speak to the product pipeline in 2024, I think you made the comment.

Operator: Thank you. If you have a question, please press star 1 on your telephone keypad. If you wish to remove yourself from the queue, simply press star 1 again.

Carl N. Scibetta: Youre seeing nice improvement in EMEA athletic business.

Operator: In the interest of time, we ask that you please limit yourself to one question and one follow-up. If you have any additional questions, you may rejoin. One moment for your first question comes from the line of Mitch Kummetz, and the support team, and the online community. Yes, thanks, everyone, and the other questions and the first quarter. I appreciate all the commentary around quarter-to-date sales and one Q sales guidance. But, you know, given the acquisition of Rogan and the rest of the panel and what comp is embedded in your Q1 guide and then also on OneQ. You talked a little bit about them, and the other two are going to be in the fall. Hi Mitch, it's Mark.

Carl N. Scibetta: Sounds like sandals are off to a good start again I don't know how much of that is weather versus the Assortments and then maybe talk a little bit about how you're how you're thinking about.

Carl N. Scibetta: The back half lapping some pretty poor performance.

Carl N. Scibetta: This year I don't know if you see that as an opportunity or if thats a category.

Speaker Change: So I want to be cautious around thanks.

Speaker Change: Good morning, Mitch.

Mitch: And the Atlantic World.

Mitch: We have a nice flow of product coming in.

Mark J. Worden: Thanks for joining us today. So let me start with sales growth for Q1 achieved right in that low single digit range. We're very encouraged. We started the Spring Campaign and Tax Miss Campaign three weeks ago, activating the learning from Holiday and BTS, and it's working very well. Sales for the last three weeks for the company have accelerated quickly, and specifically, we're in the high single-digit sales growth range for the three weeks since the campaign started, and it's accelerating even faster as we look into March and the weather turns favorable for spring. We're not disaggregating comps at this point, but I can give you a broad comment.

Mitch: We're receiving goods new fresh products on time in fact early in some cases.

Mitch: And we're seeing some.

Mitch: Nice performance out of new categories or retro categories that are consumers now latching on to.

Mitch: From a sandal standpoint, certainly weather has helped early.

Mitch: But but several categories have emerged quite well in that area and we're pleased with what we're seeing there and most definitely by flow of product into the stores.

Mitch: For Amazon a sandal perspective is much better than it was a year ago was not so little choppy a year ago.

Mark J. Worden: All banners are growing in March. We're very pleased with the strong growth acceleration in Shoe Station. Our e-commerce is accelerating like we had expected in our guidance. Rogan's is delivering where we had hoped for our guidance. And I think everyone wants to hear what we're most pleased with. Shoe Carnival is accelerating rapidly.

Mitch: Supply chain issues, where that's all cleaned up and crops are coming in as expected.

Mitch: Or early and slowing out nicely.

Mitch: Regarding boots, we're still cautious on boots.

Mitch: We need to see some freshness there enough freshness that we feel.

Mark J. Worden: Shoe Carnival is also growing for the month of March, and we're seeing strong results in the campaign. So while we're not going to break out comps per se on a banner level, I hope that helps give commentary. Every part of the business is responding fast, favorably, and in growth as we get into this campaign. Regarding weather, we're confident in March.

Mitch: We will drive incremental boot sales over a year ago.

Mitch: So we're taking a cautious approach to that like we have in the past.

Mitch: We'll partner with our major boot vendors to make sure that their supply if needed but then the result so.

Mitch: We also have an ability.

Mitch: Two to move if we need to if we're not seeing.

<unk> so.

Mark J. Worden: I mean, we can't predict if we'll get a crazy snowstorm in the upper Midwest, but our comps are easier in the March-April timeframe versus a very challenging, disappointing spring season last year. We expect March to be strong. As I said, we continue to accelerate sales in the high singles for the three weeks of the campaign, and it's accelerated from there if I just look at the month of March. So we feel very confident about March. I think an important topic for all, and I'll address it right now, what has given us a broad range in our comp from a down three to a plus one. We're still not clear yet if the consumer is going to be cautious as we get past the Easter and early spring holiday season and the event period and until we get back to school. So we have a wide range there, particularly on the Shoe Carnival banner, as to until we see how the consumer responds after this event, what will that look like? And that's really the four point range, and that range is largely in Shoe Carnival, if that's helpful, Mark. And my follow-up, Carl, and the other two.

Mitch: We will play boots next year the way we played them this year.

Speaker Change: Alright, Thanks, guys I'll get back with you.

Speaker Change: Okay.

Speaker Change: Our next question comes from the line of Jim Chartier with wellness.

Speaker Change: Question.

Speaker Change: Okay.

James Andrew Chartier: So for my question.

James Andrew Chartier: With the lower income consumer.

James Andrew Chartier: So those for you I believe for most of last year.

James Andrew Chartier: Given clients quarter to be strong.

James Andrew Chartier: Yes.

Disaggregated quality improvement.

James Andrew Chartier: Lower income versus higher income consumer and shoe Carnival Donna.

Mark J. Worden: Hi, Jim its mark.

Mark J. Worden: First spring, we're seeing improvement across banners and across demographics, it's very encouraging and the two things that are absolutely working across low income or high income urban and suburban or the new approach to our marketing campaign.

Mark J. Worden: Really surrounding people with social digital and Influencer and it's resonating quickly with Carl's fantastic slate of brands and new fresh value, we're providing working great across banners.

Mark J. Worden: First question again, and again the range for our guidance and we're still cautious as once we get past the spring season event, that's going to be the big learning, we're going to have as we get into April may and we can provide more color when we get into reporting Q1. During may of what does it look like post advent shopping for the lower income consumer but right now.

Carl N. Scibetta: You're seeing a nice improvement in the athletic business. Sounds like sandals are off to a good start. Again, I don't know how much of that is weather versus the assortment. And then maybe talk a little bit about how you're thinking about the back half, you know, lapping some pretty poor performance, and so on. Good morning, Mitch.

Mark J. Worden: Everything is resonating as strong growth across all banners are feeling really good about winning share with our plans during events season or waiting to learn and we have caution on what it's going to look like for non event season still.

Carl N. Scibetta: We are in the athletic world. We have a nice flow of product coming in. We're receiving goods, new, fresh products on time, in fact, early in some cases, and we're seeing some nice performance out of new categories or retro categories that our consumer is now latching on to. From a sandal standpoint, certainly, weather has helped early, but several categories have emerged quite well in that area, and we're pleased with what we're seeing there.

Mark J. Worden: I remember within the market and given the responses soon is there opportunity to do more within market them.

Mark J. Worden: The school and holiday based on what you've seen so far.

Speaker Change: Absolutely, yes, absolutely.

Speaker Change: We're planning to replicate and increase for back to school and we had a good growth business in 2023, we plan to activate these plans and grow our ambition is not just kids growth, but we intend to grow back to school. This year for the whole business is our goal and holiday we spoke.

Carl N. Scibetta: And most definitely, my flow of product into the stores from a sandal perspective is much better than it was a year ago. It was a little choppy a year ago with supply chain issues, but that's all cleaned up, and products are coming in as expected or early and flowing out nicely. Regarding boots, we're still cautious on boots.

Mark J. Worden: We need to see some freshness there, enough freshness that we feel will drive incremental boot sales over a year ago. So we're taking a cautious approach to that, like we have in the past. We'll partner with our major boot vendors to make sure that there's supply if needed. But then there's also, we also have an ability to move if we need to if we're not seeing will play boots next year the way we played. All right, thanks guys. We'll get back to that. Our next question comes from the line of Jim Chartier with Monis Crespi and Heart. Your line. Thank you for taking my question, and the lower income consumer, and the rest of the show, and the rest of the team, and the other two, and the lower income versus higher income consumer. Hi Jim, it's Mark.

Speaker Change: Lastly, we had a very good holiday season. This year, we can do more because we were still testing and learning what didn't work and so we can invest more for this upcoming holiday. If it continues to work and back to school. So again, we have high confidence our approach is working on event periods and will be replicated unactivated.

Speaker Change: Aggressively we'll learn if that approach works and non events seasons and if that doesn't work then we'll be able to provide an update in may.

Speaker Change: On that progress.

Speaker Change: Alright.

Speaker Change: Tori levels <unk> talked about.

Speaker Change: Towards this.

Speaker Change: This year on the specific categories, where you feel like inventories are a little too high or which categories. We focused on some levels.

Mark J. Worden: For spring, we're seeing improvement across banners and across demographics. It's very encouraging, and the two things that are absolutely working across low income or high income, urban or suburban, are the new approach to our marketing campaign. We're really surrounding people with social, digital, and influencer, and it's responding quickly with Carl's fantastic slate of brands and new, fresh value we're providing. Working great across banners

Speaker Change: Hi, Jim It's Carl and we will continue to.

Speaker Change: Drive.

Inventory levels down.

Speaker Change: At the end of the season on seasonal products.

Carl N. Scibetta: To make sure we come out even cleaner than we have in the past we're quite pleased where we came out in this year in boots.

Carl N. Scibetta: Inventory is down about 30%, we think theres still some opportunity there.

Mark J. Worden: The big question again and again, the range for our guidance, and we're still cautious, is once we get past the spring season events, that's going to be the big learning we're going to have as we get into April and May, and we can provide more color when we get into reporting Q1 during May of what it looks like post-event shopping for the lower income. But right now, everything is responding to strong growth across all banners. We're feeling really good about winning share with our plans during event season. We're waiting to learn, and we have caution on what it's going to look like for the non-event season still. And then within marketing, given the response we're seeing, is there opportunity to do more within marketing for back to school and holidays based on what you've seen so far? Absolutely not.

Carl N. Scibetta: To continue to drive that business down I'm, sorry, those engines down and then really.

Carl N. Scibetta: We are.

Carl N. Scibetta: Looking at all areas and we anticipate inventory improvements across the board that that we have any particular area that is has.

Carl N. Scibetta: Extremely high inventory levels pretty consistent across the company, but we think we can get efficiencies in all areas of the business.

Speaker Change: Alright, thank you.

Speaker Change: Next question comes from the line of Sam Poser with really.

Samuel Marc Poser: Your line is open.

Samuel Marc Poser: Good morning. Thank you for taking my questions I was just wondering if you could.

Mark J. Worden: Yeah, absolutely. We're planning to replicate and increase for back to school. We had a good kids growth business in 2023. We plan to activate these plans and grow. Our ambition is not just for kids growth, but we intend to grow back to school this year for the whole business. And holidays, we spoke at length about it. We had a very good holiday season this year.

Samuel Marc Poser: Give me some color on the store traffic that you saw in the fourth quarter, especially the shoe carnival.

Samuel Marc Poser: And then.

Samuel Marc Poser: And then sort of how what youre seeing now versus.

Samuel Marc Poser: So how all of these sales are being driven and what youre doing to drive more people or if you need to to the shoe Carnival store, specifically because it sounds like your shoe station traffic spend.

Carl N. Scibetta: We can do more because we were still testing and learning what did work. And so we can invest more for this upcoming holiday if it continues to work for back to school. So again, we have high confidence our approach is working on event periods and will be replicated and activated aggressively. We'll learn if that approach works in non-event seasons, and if that does work, then we'll be able to provide an update in May on that progress. And then on inventory levels, we talked about reducing inventory further this year. Any specific categories where you feel like your inventory is still a little too high, or which categories are you focused on? Hi Jim, it's Carl.

Samuel Marc Poser: Yeah.

Patrick C. Edwards: Hey, Sam it's Patrick.

Patrick C. Edwards: With respect to the fourth quarter.

Patrick C. Edwards: Not uncommon for our traffic pattern and match, our comparable store sales, which were down nine 4%. Our overall traffic was in that same range of down 9% throughout the fourth quarter.

Patrick C. Edwards: With respect to.

Patrick C. Edwards: Going forward now.

Patrick C. Edwards: Similarly.

Patrick C. Edwards: Not surprising that our sales are up.

Patrick C. Edwards: Low to mid single digits. Our traffic is also sort of trending the same way.

Speaker Change: Okay and then.

Carl N. Scibetta: We'll continue to drive inventory levels down at the end of the season on seasonal products to make sure we come out even cleaner than we have in the past. We're quite pleased where we came in this year on boots. Inventory's down about 30%. We think there's still some opportunity there to continue to drive that business down.

Speaker Change: Carl.

Carl N. Scibetta: You talked about.

Carl N. Scibetta: A double question here, you talked about athletic being strong in that.

Carl N. Scibetta: And that.

I guess that period.

Carl N. Scibetta: And it sounds like athletic Youre still happy with it could you talk about what kind of things are working in athletic and then separately as you look at.

Carl N. Scibetta: And then really, we are looking at all areas, and we anticipate inventory improvements across the board. Not that we have any particular area that has an extremely high inventory level. It's pretty consistent across the board, but we think we can get efficient in all areas. Thank you. Next question comes from the line of Sam Poser with Williams Trading. Your line is: Good morning.

Carl N. Scibetta: Youre talking about inventory can you talk about sort of how you think about like narrowing maybe narrowing the mix going deeper on key items, you've always done that.

Carl N. Scibetta: Some give us some idea of how the.

Carl N. Scibetta: Look versus 2023.

Carl N. Scibetta: As we move through 2024.

Patrick C. Edwards: Thank you for taking my questions. I'm just wondering if you could give me some color on the store traffic that you saw in the fourth quarter, especially at Shoe Carnival, and then sort of what you're seeing now versus how all and the other two. Sounds like, Hey Sam, it's Patrick.

Speaker Change: Sure sure Sam on the athletic side.

Speaker Change: We're starting to see.

Samuel Marc Poser: We're starting to see the customer respond to newness and freshness today.

Samuel Marc Poser: <unk> jogger kinds of products the whole soccer category are really taking off with our consumer.

Patrick C. Edwards: With respect to the fourth quarter, it's not uncommon for our traffic pattern to match our comparable store sales, which were down 9.4%. Our overall traffic was in that same range, down 9% throughout the quarter. With respect to going forward now, Similarly, it is not surprising that our sales are up low to mid single digits. Our traffic is also sort of trending that same way. Okay, and then Carl, you talked about, I've got like a double question here. Carl, you talked about being strong in that, in that.

Samuel Marc Poser: Throughout the fourth quarter and until today, our business with court.

Samuel Marc Poser: Our business with basketball and our business with.

Samuel Marc Poser: Performance running in our shoe station business.

Samuel Marc Poser: To be very very strong.

Samuel Marc Poser: But Atlantic is right now is about newness and freshness in new categories, and our customers beginning to jump into those.

Samuel Marc Poser: Those new sort of emerging new old categories that have some come out.

Samuel Marc Poser: From a standpoint of inventory sure. We most definitely we will continue to.

Carl N. Scibetta: I guess, event period, and it sounds like athletic you're still happy with it. Can you talk about what kind of things are working in athletic and, separately, as you look at and the rest of the team, as Sure, Sam. On the athletic side, we're starting to see the customer respond to newness and freshness today. Retro jogger kinds of products, the whole soccer category, are really taking off with our consumer.

Samuel Marc Poser: Okay.

Samuel Marc Poser: Added Assortments drive key items.

Samuel Marc Poser: We have a reliable slow or product coming in right now.

Samuel Marc Poser: And we feel that there is great opportunity to continue to.

Samuel Marc Poser: Drive key items, that's what we do very very well.

Samuel Marc Poser: So.

Samuel Marc Poser: We feel we're back to somewhat of a normal we are back to normal cycle. Our vendors are back to a normal cycle and we will.

Carl N. Scibetta: Throughout the fourth quarter and until today, our business with court, our business with basketball, and our business with, and the other two are in the performance running in our shoe station business, continue to be very, very strong. But athletics right now is about newness and freshness and new categories, and our customers are beginning to jump into those, those new sort of emerging new old categories come out. From a standpoint of inventory, sure, we most definitely will continue to edit assortments and drive key items. We have a reliable flow of product coming in right now, and we feel that there's a great opportunity to continue to drive key items. That's what we do very, very well.

Samuel Marc Poser: Certainly move into what I believe an exciting time.

Samuel Marc Poser: From a product standpoint, driving driving key important items and brands.

Speaker Change: Thanks, and then one last thing just about the timing.

Speaker Change: Timing shifts.

Speaker Change:

Speaker Change: Okay.

Speaker Change: Appears to me that you probably expect the comps to improve through the year, but because of the way you have the weeks comparing.

Again back to this Q2 Q3.

Carl N. Scibetta: So we feel we're back to somewhat of a normal; we are back to a normal cycle. Our vendors are back to a normal cycle, and we will certainly move into what I believe is an exciting time from a product standpoint, driving key important items and And then one last thing, just about all this timing shit, and Mark Wooden, and the. It appears to me that you probably expect the comps to improve through the year, but because of the way you have the weeks comparing, Again, back to this Q2, Q3. Um, Can you give us sort of how this works by quarter, like what, what the? and the rest, and the other, and you gain. And how does that affect Q1? Can you sort of walk us through that and give us each quote? with, How to think about just the dollars in and out of each school. Sam, thanks for the question. This is Patrick.

Speaker Change:

Speaker Change: The situation.

Speaker Change: Can you give us sort of how this works by quarter like what the what the what.

Speaker Change: Bob.

Speaker Change: You said $25 million I think in Q3 was shifting to Q2, but you'll lose a small week at the beginning of Q2 and you gain a big week at the end and how does that affect Q1 Q2 Q3.

Speaker Change: You lose I guess $15 million in Q4, but could you sort of walk through that and give us each quarter.

Speaker Change: With.

Speaker Change: How to think about just the dollar shift in and out of each quarter.

Speaker Change: Sam Thanks for the question this is Patrick.

Patrick C. Edwards: You are correct.

Patrick C. Edwards: You're correct. The meaningful impacts to be focused on are this large week that we have that moves out of Q3 and into Q2. That's the $25 million net week, not a gross week, but that's the net amount that moves, and the $15 million that we lose in Q4 and the other two are the two meaningful elements of it in the quarterly shifts. Again, over both of those periods of time between Q2 and Q3, we would expect our sales growth to level out to that 4 to 6 percent and the growth rate that we have for the overall year. In Q4, that growth rate will be lower because we're losing that $15 million. Right? I understand that. But what I'm saying is that in Q2, you're gaining a week that's bigger than 25 million, and then you're losing a week that's much smaller and the other, and the rest of the team. Plus and minus for each quarter. It would just really help being able to say, Sure, so I'll try it again in a different way.

Patrick C. Edwards: Meaningful impacts to be focused on is this large week that we have that moves out of Q3 and into Q2.

Patrick C. Edwards: That's the $25 million net not a gross fleet, but thats the net amount that moves between the shifting of one.

Patrick C. Edwards: What moves in and what moves out and then the $15 million that we lose in Q4.

Patrick C. Edwards: Compared to 2023 those are the two meaningful elements of it and the quarterly shifts again over both of those periods of time between Q2 Q3, we would expect our sales growth to level out to that 4% to 6% growth rate that we have for the overall overall year.

Patrick C. Edwards: In Q4 that growth rate will be lower because we're losing that $15 million.

Speaker Change: Right I understand that but what I'm, saying is that in Q2, so youre gaining a week that's bigger than $25 million and then youre, losing a week that's much smaller than that because youre getting youre, netting that you're netting that but youre, gaining like 30 of them, losing five or whatever it is could you give us.

Yes.

Speaker Change: And minus four each quarter.

Speaker Change: It would just really helped being able to sure. So I'll Trust I'll try it again in a different way the impact on Q1 is not meaningful.

Patrick C. Edwards: The impact on Q1 is not meaningful. The impact on Q2 will be plus $25 million, and the impact on Q3 will be minus 23, and then Q4 is roughly down $15 million. Thank you. Another question comes from Mitch Kummetz with Seaport Research.

Speaker Change: The impact on Q2 will be plus $25 million and the impact on Q3 will be minus $25 million.

Speaker Change: And then Q4 is roughly down $15 million.

Speaker Change: Alright, Thank you very much I appreciate it.

Speaker Change: Another question comes from the line of Mitch <unk> with Seaport Research. Your line is open.

Operator: Your line is, "Yes, thanks for taking the time, questions. I'm going to ask Sam's last question maybe a little bit differently. I want to focus on EBIT.

Mitch: Yes, thanks for taking my additional questions.

Mitch: Sandblast question maybe.

Mitch: Little bit differently I want to focus on the EBIT.

Mitch: Starting with the 50 <unk> week.

Operator: So starting with the 53rd and the rest of the industry, what was the impact on EBIT and then that 2Q, 3Q $25 million shift you're referencing? How does that sort of flow with the rest of the team?

Mitch: In 2023, Patrick you mentioned that was about $15 million in sales.

Mitch: What was the impact on EBIT and then that.

Mitch: Two Q3, Q $25 million shift youre referencing.

Mitch: How does that sort of flow through to EBIT, so like how much EBIT.

Patrick C. Edwards: Hey Mitch, that's a great question. Our point of view on that, generally speaking, is each one of those sales dollars is roughly about 10 million dollars, excuse me, is about 10% of operating income. So $15 million, $1.5 million-ish, something like that on operating income. Before you get down to operating income, it's probably going to be bigger than that, and probably somewhere around half that number. So the $15 million, and principally somewhere around half of that without any other. I guess I didn't quite follow that because you said one million is about 10%, and then you said something about half. I don't, I didn't. Sorry. Sorry, Mitch.

Mitch: Shifting from <unk> to <unk>.

Patrick C. Edwards: Hey, Mitch it's a great question our point of view on that generally speaking is each one of those sales dollars is roughly about $10 million or excuse me is about.

Mitch: 10% of operating income.

Mitch: So $15 million $1 5 million ish something like that on operating income on before you can get sorry, before you get down to operating income is probably going to be bigger than that.

Probably somewhere around half of that number so the $15 million.

Mitch: It is principally somewhere somewhere around half of that without any other effects.

Mitch: Okay.

Mitch: Yeah.

Speaker Change: I guess I didn't quite follow that because you said 1 million, it's about 10% and then you said something about it.

Speaker Change: Sorry, sorry, Mitch let me get your question again down too.

Speaker Change: An EBIT number.

Patrick C. Edwards: Let me get your question again. It's down to an EBIT number. So it's eight to ten, and the rest of the program.

Mitch: So it's eight to 10.

Mitch: 8% to 10% of the number like I said before.

Mitch: On operating income whenever we're pulling down two from revenues down to EBIT, it's about 8% to 10%.

Patrick C. Edwards: Okay, thanks. And then for 2024, you mentioned that gross margin will be sort of flat-ish year over year. How does that sort of break down?

Speaker Change: Okay. Thanks.

Speaker Change: And then on 2024, you mentioned that gross margin will be sort of flattish year over year.

Speaker Change: How does that sort of breakout between merch margin and BDO.

Patrick C. Edwards: and I'm assuming, especially given the comp level, that those are probably sort of flattish as well. Is that how you're thinking, Mitch? That's another good question. I can start to provide a little bit of color and then have Mark pull back in a little bit. But with respect to our overall gross profit margin, we do see the capability of keeping this above 35% thing going for the entire year. We still need a little bit more clarity on the Rogan's acquisition and whether or not those stores will have any impact at all as we move them into our process and our ability and into our distribution and supply chain. But overall, we see a gross profit margin that will stick and be even for the current year. I would say with respect to merchandise margin and our product margins associated with that, we still see some of that. We see strong product margins continuing into the current year, and those product margins are what drives our overall merchandise. So those will be flat.

Speaker Change: Assuming maybe.

Speaker Change: Especially kind of given the comp level that those are probably sort of flattish as well is that how youre thinking about it.

Speaker Change: Mitch Thats another good question.

Mitch: I can I can start to give provide a little bit.

Of color and then have mark pulled back a little bit, but with respect to our overall gross profit margin, we do see the capabilities of keeping this above 35% thing running for the entire year.

Mitch: We still need a little bit more clarity on the <unk> acquisition, and whether or not those stores will have some bit of impact and as we move them into our our process and our ability and into our distribution and supply chain, but overall, we see a margin that grew.

Mitch: Profit margin that will stick and be even to the to the current year I would say with respect to merchandise margin and are in our product margins associated with that we still see strong product margins continuing into the current year and those product margins is what drives our overall merchandise margin. So those will be flat and then.

Patrick C. Edwards: And then the concept of BDNO is also expected to be flat, but hopefully, improving a little bit as we leverage some stores for some sales growth. And then one last one for me, just on SG&A. Sounds like from a market standpoint, you guys seem to be seeing a lot of success with the new campaign. It sounds like you're not really for 2024. It doesn't sound like you're expecting to spend more and the other way around, and I'm just thinking about spending sort of better in terms of kind of how and and the rest of the team. This is Mark, spot on Mitch.

Mitch: The concept of Bdnf is also expected to be flat, but hopefully improving a little bit as we leveraged some stores overlook over some sales growth.

Okay and then one last one for me just on the SG&A.

Speaker Change: It sounds like from a mark from a marketing standpoint, you guys seem to be seeing a lot of success with the new campaign.

Speaker Change: It sounds like Youre not really for 2024.

Speaker Change: It doesn't sound like you're expecting to spend more from a percentage standpoint, you just.

Speaker Change: Expecting to spend spend sort of better in terms of kind of how and when youre flowing those marketing dollars could maybe just sort of elaborate on that.

Speaker Change: This is mark spun on niche.

Mark J. Worden: We tested and learned a significant shift out of traditional marketing vehicles, like television, like print, during BTS and then again during the holidays and into more effective targeted vehicles like digital, like social, like influencers. It worked, as we shared, and we're going to do that again this year with a significantly reduced budget, and the other two are the companies that have been investing in those traditional mediums that frankly weren't giving us great return and weren't delivering great traffic for us last year, and have been shifting their funding to far more efficient, profitable tactics like I just mentioned. If we see it working in non-peak seasons, we'll increase advertising investment and talk more about that in subsequent quarters if we decide to take SG&A higher if it's getting a strong return on ad spend. But right now, we've got the events loaded effectively, and I think we're in really good shape.

Mark J. Worden: We tested and learned significant shift out of traditional marketing vehicles like TV like trends Turing Etfs, and then again during holiday and into more effective targeted vehicles like digital like social Influencer.

Mark J. Worden: It works as we shared and we're going to do that again this year, having a significantly reduced.

Investments in those traditional mediums that frankly, werent, giving us great return and work delivering great traffic for us last year and shifting our fundings are far more efficient profitable tactics like I just mentioned.

Mark J. Worden: If we see it working in non peak seasons will increase in advertising investment and talk more about that in pursuing quarters. If we decided to take SG&A higher if it is getting a strong return on AD spend but right now we've got the events loaded effectively.

Mark J. Worden: Thank for a really good shape.

Steve R. Alexander: All right. At this time, there are no other questions, so I will hand the call back over to management for closing remarks. Thanks again for joining today's call. This is Steve. I'm around all day, so if you'd like to talk, please reach out to me. Thank you very much. Ladies and gentlemen, this concludes today's conference call. You may now go.

Mark J. Worden: Alright.

Speaker Change: At this time there are no other questions. So I will hand, the call back over to management for closing remarks.

Speaker Change: Thanks again for joining today's call. This is Steve I'm around all day. So lots of talk please reach out to me. Thank you very much.

Speaker Change: Ladies and gentlemen. This concludes today's conference call you may now disconnect.

Speaker Change: Yeah.

Speaker Change: Okay.

Speaker Change: Okay.