Q4 2024 Hibbett Inc Earnings Call

Operator: Greetings. Welcome to Hibbett's fourth quarter 2024 earnings conference call. At this time, all participants are in a listen only mode.

Greetings welcome to Hibbett sports Clutter 'twenty 'twenty four earnings conference call. At this time, all participants are in a listen only mode.

Operator: A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. Please note this conference is being recorded. I will now turn the conference over to Gavin Bell, Vice President of Finance and Investor Relations. Thank you. You may begin. Thank you and good morning.

<unk> and answer session will follow the formal presentation, if anyone should require operator assistance. During the conference. Please press star zero on your telephone keypad. Please note. This conference is being recorded I will now turn the conference over to Gavin Bell Vice President of Finance and Investor Relations. Thank you you may begin.

Gavin Bell: Thank you and good morning. Please note that we have prepared a slide deck that we will refer to during our prepared remarks, a slide deck is available on <unk> dot com in the.

Gavin Bell: Please note that we have prepared a slide deck that we will refer to during our prepared remarks. This slide deck is available on Hibbett.com, the investor relations link found at the bottom of the homepage, or at investors.hibbett.com, under the news and events section. These materials may help you follow along with our discussion this morning.

Gavin Bell: The Investor Relations link found at the bottom of the homepage orach investors Dot hibbett dot com and under the news and events section. These materials may help you follow along with our discussion. This morning before we begin I would like to remind everyone that some of the management's comments. During this conference call are forward looking statements.

Gavin Bell: Before we begin, I'd like to remind everyone that some of the management's comments during this conference call are forward-looking statements. These statements, which reflect the company's current views with respect to future events and financial performance, are made in reliance on the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and are subject to uncertainties and risks. It should be noted that the company's future results may differ materially from those anticipated and discussed in the forward-looking statement. Some of the factors that could cause or contribute to such differences have been described in the news release issued this morning and are noted on slide two of the earnings presentation and the company's annual report on Form 10-K and in other filings with the Securities and Exchange Commission. I refer you to those sources for more information.

Gavin Bell: These statements, which reflect the company's current views with respect to future events and financial performance are made in reliance on the safe Harbor provisions of the private Securities Litigation Reform Act of 90 to 95 and are subject to uncertainties and risks.

Gavin Bell: It should be noted that the company's future results may differ materially from those anticipated and discussed in the forward looking statements.

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

Gavin Bell: We refer you to those sources for more information also to the extent non-GAAP financial measures discussed on the call you may find a reconciliation to the most directly comparable GAAP measures on our website.

Gavin Bell: Also, to the extent non-GAAP financial measures are discussed on the call, you may find a reconciliation to the most directly comparable GAAP measures on our website. Lastly, I'd like to point out that management's remarks during this conference call are based on information and understandings believed accurate as of today's date, March 15th, 2024. Because of the time-sensitive nature of this information, it is the policy of Hibbett Inc. to limit the archived replay of this conference call webcast to a period of 30 days. Participants on this call are Mike Longo, President and Chief Executive Officer, Jared Briskin, Executive Vice President, Merchandising, Bob Volke, Senior Vice President and Chief Financial Officer, Bill Quinn, Senior Vice President of Marketing and Digital, and Ben Knighten, I'll now turn the call over to Mike Longo.

Lastly, I'd like to point out that management's remarks. During this conference call are based on information and understandings believed accurate as of today's date March 15th 2024, because of the time sensitive nature of this information. It is the policy inhibiting to achieve to limit. The archived replay of this conference call webcast to a period of 30 days.

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

Michael E. Longo: Good morning, and welcome to the Hibbett Fourth Quarter Earnings Call. For those of you following along on the slides, I'm on slide three, entitled "Overview." Hibbett delivered a solid financial and operating performance for the fourth quarter of Fiscal 24, capping off another year of profitable growth. We're especially proud to reach $1.73 billion in annual sales for the year, surpassing Fiscal 23 sales and setting a new company record. Throughout the year, our team did an outstanding job with consistent execution of our strategy as we continued to win market share. Notably, we achieved these results in what has continued to be a challenging retail environment. Consumers are still facing inflationary pressure with higher prices on many essential items and are, therefore, being more selective in their discretionary spending.

Good morning, and welcome to the Hibbett fourth quarter earnings call for those of you following along on the slides I'm on slide three entitled overview.

Gavin Bell: It delivered a solid financial and operating performance for the fourth quarter of fiscal 'twenty four capping off another year of profitable growth for <unk>.

Gavin Bell: Proud to reach $1 $73 billion in annual sales for the year, surpassing fiscal 'twenty three sales and setting a new company record throughout the year. Our team did an outstanding job of consistent execution of our strategy as we continue to win market share, notably we've achieved these results in what has continued to be at.

Gavin Bell: Challenging retail environment consumers are still facing inflationary pressures with higher prices on many essential items.

Gavin Bell: And are therefore being more selective in their discretionary spending.

Michael E. Longo: A distinct competitive advantage for Hibbett is the quality and variety of our product mix. We've worked hard to offer a compelling range of trend-relevant brands and products that are in line with current spending patterns. Our results for the fourth quarter were boosted by holiday sales, which were in line with expectations. Additionally, our superior customer service of best-in-class omni-channel shopping, strong vendor relationships, and strategic store placement in underserved markets are distinct competitive

Gavin Bell: A distinct competitive advantage for hibbett is the quality and variety of our product mix. We've worked hard to offer a compelling range of trend relevant brands and products that are in line with current spending patterns our.

Gavin Bell: Our results for the fourth quarter was boosted by holiday sales, which were inline with expectations.

Additionally, our superior customer service, our best in class Omnichannel shopping experience strong vendor relationships and strategic store placement and underserved markets are distinct competitive advantage.

Gavin Bell: <unk> that allowed us to continue to gain market share in fiscal 'twenty four.

Michael E. Longo: Footwear sales continue to be the key driver of our sales, especially for our premium brand. During the fourth quarter, we had a robust schedule of new product launches, which continued to generate excitement from our brand loyal customers. This was also the first full quarter under our new connected partnership, connecting Hibbett and Nike's loyalty program. Our loyalty customers now benefit from an enhanced retail experience when they purchase Nike and Jordan products, whether in one of our stores or online.

Gavin Bell: Footwear sales continued to be the key driver of our sales, especially for our premium brands during.

Gavin Bell: During the fourth quarter, we had a robust schedule of new product launches, which continued to generate excitement from our brand loyal customers. This was also the first full quarter under our new connected partnership connect inhibits nike's loyalty programs.

Our loyalty customers now benefit from an enhanced retail experience when they purchase Nike and Jordan product, whether one of our stores or online.

Michael E. Longo: Our loyalty programs have also been extremely popular with our customers, adding value to the overall shopping experience and driving more traffic to our stores on our omni-channel platform. Looking ahead to fiscal 25, we expect to follow the same growth trajectory and continue to gain market share. Our sales guidance for the upcoming year reflects this confidence, testament to our proven ability to execute our strategy. At the same time, we intend to make significant capital investments in our infrastructure, which will affect our short-term profitability. However, as always, we are investing for the long term, and we believe these investments will further enhance our strong value proposition and drive sustainable, profitable growth. We'll also be intentional about adding new stores in underserved markets, with the goal to add 45 to 50 stores in the year ahead.

Gavin Bell: Our loyalty programs have also been extremely popular with our customers, adding value to the overall shopping experience and driving more traffic to our stores and our omni channel platform.

Gavin Bell: Looking ahead to fiscal 'twenty five we expect to follow the same growth trajectory and continue to gain market share or.

Gavin Bell: Our sales guidance for the upcoming year reflects this confidence estimate to our proven ability to execute our strategy at.

Gavin Bell: At the same time, we intend to make significant capital investments in our infrastructure, which will affect our short term profitability.

Gavin Bell: However, as always we are investing for the long term. We believe these investments will further enhance our strong value proposition and drive sustainable profitable growth.

Gavin Bell: We will also be intentional about adding new stores in underserved markets with the goal to add 45 to 50 stores in the year ahead.

Michael E. Longo: Our sophisticated omnichannel platform remains a key competitive advantage, and we will continue to focus on providing the latest technology and functionality to improve the overall customer experience. Before turning the call over to Jared, I'd like to thank our approximately 12,000 team members across the organization for their dedication and hard work in a challenging environment. But whether across our nearly 1,200 stores, our omni-channel platform, our logistics facilities, or the store support center, they proudly represent Hibbett with an unwavering commitment to the integrity of our brand and outstanding support for our loyal customers. I'll now turn the call over to Jared.

Gavin Bell: Sophisticated omnichannel platform remains a key competitive advantage and we will continue to focus on providing the latest technology and functionality to improve the overall customer experience.

Speaker Change: Before turning the call over to Jerry I'd like to thank our approximately 12000 team members across the organization for their dedication and hard work in a challenging environment.

Speaker Change: Weather across our nearly 1200 stores, our omnichannel platform, our logistics facilities or the store support center. They proudly represent inhibit with an unwavering commitment to the integrity of our brand and outstanding support for our loyal customers I will now turn the call over to Jerry.

Jared S. Briskin: Thank you, Mike. Good morning. Please turn to slide five entitled Merchandising. The fourth quarter opened with a strong start to the holiday season but faded at the end of December and in January, but it was our strongest category during the quarter with comp sales down mid-singletons. Strong trends were seen in lifestyle, basketball, and running.

Jerry: Mike Good morning, Please turn to slide five entitled merchandising.

Jerry: The fourth quarter opened with a strong start to the holiday season, but stated at the end of December and in January.

Jerry: But where it was our strongest category during the quarter with comp sales down mid single digits strong trends were seen in lifestyle basketball and running this was offset with some weakness in the performance of some launches in the latter part of the quarter.

Jared S. Briskin: This was offset by some weakness in the performance of some launches in the latter part of the quarter. Peril in team sports and Little League were both negative comps for the quarter, down high single digits and low 30s, respectively. These little categories were weak due to the warm and dry weather pattern.

Jerry: Apparel and team sports were both negative comps for the quarter down high single digits, and low thirties, respectively seasonal categories, where a week due to the warm and dry weather patterns apparel also continues to be affected by promotional activity due to elevated levels of inventory in the market, while apparel was a challenge overall socs and accessories.

Jared S. Briskin: Apparel also continues to be affected by promotional activity due to elevated levels of inventory in the market. While apparel was a challenge, overall, socks and accessories continue to be strong performers. Specific to footwear and apparel, comp sales in the men's business were down mid-single digits, with kids' business down high-single digits. Women's was our best performer, with low single digits.

Jerry: <unk> continues to be strong performers.

Jerry: Specific to footwear and apparel comp sales in the men's business were down mid single digits with kids business down high single digits Women's was our best performer up low single digits.

Jared S. Briskin: Men's was affected by high single-digit declines in apparel, with footwear down mid-single digit. Kids were down low 20s in apparel, while footwear was down mid-single digits. Women's was up low single digits, driven by a high single digit increase in footwear, offset by a low 20s decrease in apparel results. As expected, we ended fiscal year 24 with a high teens decrease in inventory compared to the end of fiscal 23. Inventory levels declined in the low teens from the end of the third quarter of fiscal 24.

Jerry: Men's was affected by high single digit declines in apparel with footwear down mid single digits kids was down low twenty's and apparel, while footwear was down mid single digits.

Jerry: Women's was up low single digits, driven by a high single digit increase in footwear offset by a low twenty's decrease in apparel results.

Jerry: As expected we ended fiscal year 'twenty four with a high teens decrease in inventory compared to the end of fiscal 'twenty three inventory levels declined in the low teens from the end of the third quarter of fiscal 'twenty for promotional efforts as well as support from our key brand partners aided achieving our inventory reduction goals I'll now hand.

Robert J. Volke: Promotional efforts, as well as support from our key brand partners, aided in achieving our inventory reduction goals. I'll now hand it over to Bob to discuss our financial results. Thank you, Jared, and good morning.

It over to Bob to cover our financial results.

Robert J. Volke: Thank you Jared and good morning, please refer to slide six for an overview of Q4 results. As a reminder, all financial results are reported on a consolidated basis that includes both the EBIT and city gear brands I would also like to call out that the fourth quarter of fiscal 2024 was a 14 week quarter and fiscal 2024 was a 53 week year.

Robert J. Volke: Please refer to slide 6 for an overview of Q4 results. As a reminder, all financial results are reported on a consolidated basis that includes both the Hibbett and CityGear brands. I would also like to call out that the 4th quarter of fiscal 2024 was a 14-week quarter, and fiscal 2024 was a 53-week year. Comp sales figures for the current quarter and the year exclude this extra week. Total net sales for the fourth quarter of fiscal 24 increased 1.8% to $466.6 million from $458.3 million in the fourth quarter of fiscal 23. Overall comp sales decreased 6.4% versus the prior year fourth quarter.

Robert J. Volke: Comp sales figures for the current quarter and the year exclude this extra week.

Robert J. Volke: Total net sales for the fourth quarter of fiscal 2000 for increased one 8% to $466 6 million from $458 3 million in the fourth quarter of fiscal 'twenty three.

Robert J. Volke: <unk> comp sales decreased six 4% versus the prior year fourth quarter. Please note that we had a very strong fourth quarter performance last year generating overall 15, 5% comp.

Robert J. Volke: Please note that we had a very strong fourth quarter performance last year generating overall 15.5% comp. However, Wreck and Mortar comp sales declined 9.2% compared to the prior year's fourth quarter, while e-commerce comp sales actually increased 6.9% compared to the same period in fiscal 2023. E-commerce sales accounted for 18.9% of total net sales during the current quarter, compared to 17.4% in the fourth quarter of fiscal 2023. Gross margin was 34.5% of net sales for the fourth quarter of fiscal 24, compared with 35.2% in the fourth quarter of last year. This approximate 70 basis point decline was driven primarily by lower average product margin of approximately 125 basis points and an approximate 55 basis point increase in store occupancy, freight, shipping, and logistics.

Robert J. Volke: Brick and mortar comp sales declined nine 2% compared to the prior year's fourth quarter, while e-commerce comp sales actually increased six 9% compared to the same period in fiscal 2023.

Robert J. Volke: E Commerce sales accounted for 18, 9% of total net sales during the current quarter compared to 17, 4% in the fourth quarter of fiscal 'twenty three.

Robert J. Volke: Margin was 34, 5% of net sales for the fourth quarter of fiscal 'twenty four compared with 35, 2% in the fourth quarter of last year. This approximate 70 basis point decline was driven primarily by lower average product margin of approximately 125 basis points or approximately 55 basis point increase in store occupancy.

Robert J. Volke: Shipping and logistics.

Robert J. Volke: Freight, shipping, logistics costs, and shrink have improved its percent of sales on a year-over-year basis, partially offsetting the unfavorable average product margin and store occupancy performance. Freight was favorable by approximately 60 basis points, logistics was favorable by approximately 30 basis points, and shrink was favorable by approximately 10 basis points. SG&A expenses were 23% of net sales for the fourth quarter of fiscal 24, compared with 21.6% of net sales for the fourth quarter of last year.

Robert J. Volke: Excuse me, great shipping logistics cost and shrink have improved as a percent of sales on a year over year basis, partially offsetting the favorable unfavorable average product margin and store occupancy performance freight was favorable by approximately 60 basis points logistical favorably by approximately 30 basis points and shrink was favorable by approximately 10 basis points.

Robert J. Volke: SG&A expenses were 23% of net sales for the fourth quarter of fiscal 'twenty four compared with 21, 6% of net sales for the fourth quarter of last year with approximately 140 basis point increase was primarily the result of higher store wages and related benefit costs, driven by inflation, our growing store base and increased data processing costs associated with ongoing investment.

Robert J. Volke: This approximate 140 basis point increase is primarily the result of higher store wages and the related benefit costs driven by inflation, a growing store base, and increased data processing costs associated with ongoing investment in cloud-based back-office systems and technology. The depreciation and amortization in the fourth quarter of Fiscal 24 increased approximately $1.4 million in comparison to the same period last year, reflecting increased capital investment in store development, technology initiatives, and various infrastructure projects over the last three fiscal years. We generated $40.6 million of operating income, or 8.7% of net sales, in the fourth quarter of this year, compared to $50.7 million, or 11.1% of net sales, in the prior year's fourth quarter. Net income for the 14 weeks ended February 3rd, 2024, was $30.9 million, or $2.55 per diluted share, compared to $38.4 million, or $2.91 per diluted share, for the 13 weeks ended January 28th, 2023. At the end of the fourth quarter, fiscal 24, we had 21.2 million of available cash and cash equivalents on our unaudited, condensed, consolidated balance sheet and 45.3 million of debt outstanding on our 160 million dollar unsecured line of credit. That inventory at the end of the fourth quarter was 344.3 million, an 18.2% decrease from the beginning of the year.

Robert J. Volke: And cloud based back office systems and technology.

Robert J. Volke: Depreciation and amortization in the fourth quarter fiscal 2004 increased approximately $1 4 million in comparison to the same period last year, reflecting increased capital investment on store development technology initiatives and various infrastructure projects over the last three fiscal years, we generated $46 million of operating income or eight 7% of net sales in the fourth.

Robert J. Volke: Part of this year compared to $50 7 million or 11, 1% of net sales in the prior year's fourth quarter net income for the 14 weeks ended February three 2024 was $30 9 million or $2 55 per diluted share compared to $38 4 million for $2 91 per diluted share 13 weeks ended January.

Robert J. Volke: $28 23.

Robert J. Volke: We ended the fourth quarter of fiscal 'twenty, four with $21 2 million of available cash cash equivalents on our unaudited condensed consolidated balance sheet and $45 $3 million of debt outstanding on our $160 million unsecured line of credit.

Net inventory at the end of the fourth quarter was $344 3 million and 18, 2% decrease from the beginning of the year.

Robert J. Volke: Capital expenditures during the fourth quarter were $20 7 million with approximately 73% attributed store development projects, including new stores Remodels relocations and new signage, we opened 11, new net new stores in the fourth quarter, bringing the store base to 1169 in 36 states.

Robert J. Volke: Paid a recurring quarterly dividend in the fourth quarter in the amount of <unk> 25 per eligible common share for a total outflow of approximately $2 9 million. There were no repurchases of shares during the fourth quarter similar to the prior year fourth quarter.

Robert J. Volke: Capital expenditures during the fourth quarter were $20.7 million, with approximately 73% attributed to store development projects, including new stores, remodels, relocations, and new signage. We opened 11 new net new stores in the fourth quarter, bringing the store base to 1,169 in 36 states. We paid a recurring quarterly dividend in the fourth quarter in the amount of $0.25 per eligible common share for a total outflow of approximately $2.9 million. There were no repurchases of shares during the fourth quarter, similar to the prior year quarter.

Robert J. Volke: Moving on to slide seven to discuss full year results.

Robert J. Volke: Total net sales for the 53 weeks of fiscal 'twenty for increased one 2% to $1 73 billion, while full year comparable sales decreased three 1% versus the equivalent 52 weeks in fiscal 'twenty, three brick and mortar comp sales declined four 4%.

Robert J. Volke: E Commerce comp sales increased four 1% compared to the prior year.

Robert J. Volke: Moving on to slide 7 to discuss full-year results, total net sales for the 53 weeks of fiscal 24 increased 1.2% to $1.73 billion, while full-year comparable sales decreased 3.1% versus the full-length 52 weeks of fiscal 23. Brick-and-mortar comp sales declined 4.4%, and e-commerce comp sales increased 4.1% compared to the prior year.

Robert J. Volke: Full year gross margin was 33, 8% of net sales versus 35, 2% of net sales last year. This is an approximate 140 basis point decline the decline in year over year gross margin was primarily due to lower average product margin of approximately 210 basis points and higher store occupancy cost of approximately 40 basis points on the positive.

Robert J. Volke: We experienced year over year improvement in freight shipping and logistics cost as a percent of net sales freight was favorable by approximately 70 basis points logistics with favorable by approximately 30 basis points and shrink was favorable by approximately 10 basis points.

Robert J. Volke: The full-year gross margin was 33.8% of net sales versus 35.2% of net sales last year, an approximate 140 basis point decline. The decline in year-over-year gross margin was primarily due to lower average product margin by approximately 210 basis points and higher store occupancy costs of approximately 40 basis points.

Robert J. Volke: SG&A expenses were 23% of net sales for the 53 weeks ended February 324, compared to 22, 8% in the 52 weeks ended January 28 of 23, the approximate increase of 20 basis points was primarily the result of increased store wages and data processing costs, partially offset by lower professional fees and advertising.

Robert J. Volke: On the positive side, we experienced year-over-year improvement in freight, shipping, and logistics costs as a percent of net sales. Freight was favorable by approximately 70 basis points, logistics was favorable by approximately 30 basis points, and shrink was favorable by approximately 10 basis points. SG&A expenses were 23% of net sales for the 53 weeks ended February 3rd, 2024, compared to 22.8% in the 52 weeks ended January 28th, 2023. The approximate increase of 20 basis points is primarily the result of increased store wages and data processing costs partially offset by lower professional fees and advertising. We generated $137 million of operating income, or 7.9% of net sales, during Fiscal 24, compared to $168.4 million, or 9.9% of net sales, in Fiscal 23. Net income for the current year was $103.2 million, or $8.17 per diluted share, compared with $128.1 million, or $9.62 per diluted share, in the prior year. Capital expenditures in fiscal 24 were $57.9 million, compared to $62.8 million in fiscal 23.

Robert J. Volke: Generated $137 million of operating income or seven 9% of net sales during fiscal 'twenty four compared to $168 4 million or nine 9% of net sales in fiscal 'twenty. Three net income for the current year was $103 2 million or $8 17 per diluted share compared with $128 1 million or $9 six.

Robert J. Volke: <unk> two per diluted share in the prior year.

Robert J. Volke: Capital expenditures in fiscal 'twenty, four were $57 9 million compared to $62 8 million in fiscal 'twenty. Three current year capital expenses are predominantly related to store initiatives, including new store openings relocations expansions remodels and technology upgrades for.

Robert J. Volke: For the year, our store count increased by a net of 36 units comprised of 44, new locations and eight closures. Our total store count stands at 1169 at the end of fiscal 'twenty four.

Robert J. Volke: On a full year basis, we repurchased approximately one $1 6 million shares under our share repurchase plan at a total cost of $53 2 million, we paid for recurring quarterly dividends throughout fiscal 'twenty four for total outflow of $12 4 million.

Robert J. Volke: 50, <unk> week in fiscal 'twenty four resulted in net product sales of approximately $22 9 million. This incremental week contributed approximately 26% or sorry, two six to $2 8 million and net income to both the fourth quarter and the full year.

Robert J. Volke: Current year capital expenditures were predominantly related to store initiatives, including new store openings, relocations, expansions, remodels, and technology upgrades. For the year, our store count increased by a net of 36 units, comprised of 44 new locations and 8 closures. Our total store count stands at 1,169 at the end of Fiscal 24.

Robert J. Volke: Diluted EPS standpoint, the 50, <unk> week impacted the fourth quarter by approximately 21% to 23 and.

Robert J. Volke: And impacted the full year by approximately 21 to 'twenty two.

Robert J. Volke: In addition, we recorded a $3 $5 million increase the revenue in the fourth quarter due to a change in our estimate of gift card breakage. This change in estimate was supported by the historical redemption pattern of gift cards outstanding is applied prospectively the impact of the fourth quarter EPS was approximately <unk> 23.

Robert J. Volke: On a full year basis, we repurchased approximately 1.16 million shares under our share repurchase plan at a total cost of $53.2 million. Additionally, we paid four recurring quarterly dividends throughout FYSB 24 for a total outflow of $12.4 million. The 53rd week in fiscal 24 resulted in net product sales of approximately $22.9 million. This incremental week contributed approximately $2.6 to $2.8 million in net income to both the 4th quarter and the full year. From a diluted EPS standpoint, the 53rd week impacted the 4th quarter by approximately 21-23 cents and impacted the full year by approximately 21-22 cents.

Robert J. Volke: In the full year impact was approximately 22.

Robert J. Volke: I'll now turn the call over to Bill Quinn to discuss consumer insight.

William G. Quinn: Thank you, Bob and Q4 loyalty sales grew high single digits. This was driven by more member shoppers and average ticket growth new member shoppers grew low double digits and existing members shoppers grew high single digits.

William G. Quinn: Higher average unit retails drove increases in average ticket.

Speaker Change: A lot of energy around our loyalty program in Q4.

Speaker Change: This was the first full quarter under our new connected partnership net inhibit Nike as well as the programs.

<unk> had been receptive to the program and we are pleased with the results. We are seeing we are seeing healthy sign ups as well as favorable purchase behavior.

Speaker Change: Net by 'twenty five the continuation of connected membership will advance the ways in which we engage and delight our members across all Omnichannel touch points.

William G. Quinn: In addition, we recorded a $3.5 million increase in revenue in the fourth quarter due to a change in our estimate of gift card breakage. This change in estimate was supported by the historical redemption pattern of gift cards outstanding as applied prospectively. The impact of the fourth quarter EPS was approximately 23 cents, and the full year impact was approximately 22 cents. I'll now turn the call over to Bill Quinn to discuss Consumer Insights. Thank you, Bob.

Speaker Change: During Q4, we also made investments in our digital channels to acquire more loyalty customers.

Speaker Change: Efforts helped fuel our overall loyalty program sales growth and drove online sales.

Speaker Change: Q4, total online sales increased 10, 5% versus last year E. Commerce represented approximately 19% of total sales for the quarter versus last year's 17%.

William G. Quinn: In Q4, loyalty sales grew high single digits. This was driven by more member shoppers and average ticket growth. New member shoppers grew low double digits, and existing member shoppers grew high single digits. Higher average unit retails drove increases in average. There was a lot of energy around our loyalty program in Q4. This was the first full quarter under our new connected partnership, connecting Hibbett and Nike's loyalty programs.

Speaker Change: All nine traffic conversion and average ticket all increased in Q4, driven by key footwear styles marketing investments and customers utilizing more online services, including online buy online pickup in store buying out pay later.

Speaker Change: Lastly for the overall business, we are continuing to keep a pulse on how our customers are feeling this quarter customers tend to spend more on athletic footwear and apparel than last year. However, there has been some uncertainty from customers around the size and timing of their tax refund.

William G. Quinn: Customers have been receptive to the program, and we are pleased with the results we are seeing. We are seeing healthy sign-ups as well as favorable purchase behavior. In FY25, the continuation of connected membership will advance the ways in which we engage and delight our members across all on-the-channel touchpoints.

Speaker Change: Also customers continue to have elevated concerns around inflation.

Speaker Change: Based on our research, we expect a more cautious and selective consumer going into FY 'twenty five now.

William G. Quinn: During Q4, we also made investments in our digital channel to acquire more loyalty customers. Those efforts helped fuel our overall multi-program sales growth and drove online sales. In Q4, total online sales increased 10.5% versus last year. E-commerce represented approximately 19% of total sales for the quarter versus last year's 17%. Online traffic, conversion, and average ticket all increased in Q4, driven by key footwear styles, marketing investments, and customers utilizing more online services including online shopping, buy online, pick up in store, buy now, pay later.

Speaker Change: Now hand, the call back to Bob to discuss fiscal 2025 guidance.

Robert J. Volke: We're now moving forward to slide nine and talk about the guidance.

Note that fiscal 'twenty five fiscal 2025 will end on February one 2025 will be comprised of 52 weeks versus the 53 weeks, we just experienced in fiscal 'twenty four.

The number of business and economic challenges, we faced in fiscal 'twenty four we will continue to impact our business in fiscal 'twenty. Five. These challenges include the potential for inflation and interest rates to remain elevated the continued use of selected promotional activity to drive traffic ongoing wage pressures are more cautious and selective consumer and ongoing GOP geopolitical conflicts.

Robert J. Volke: These factors contribute to the complexity and volatility in forecasting fiscal 'twenty five results are.

William G. Quinn: Lastly, for the overall business, we continue to keep a pulse on how our customers are feeling. This quarter, customers intend to spend more on athletic footwear and apparel than last year. However, there has been some uncertainty from customers around the size and timing of their tax refunds.

Robert J. Volke: Our estimated full year guidance for fiscal 2025 is as follows.

Robert J. Volke: Total net sales in fiscal 'twenty five are anticipated to be flat to up approximately 2% compared to our full year fiscal 'twenty four results through the transition from a 53 week year in fiscal 'twenty four to a 52 week year in fiscal 'twenty five comparable sales for fiscal 2025 to be compared to weeks two through 53 in fiscal 'twenty four we.

Robert J. Volke: Also, customers continue to have elevated concerns around inflation. Based on our research, we expect a more cautious and selective consumer going into FY25. Now, I hand the call back to Bob to discuss fiscal 2025 guidance. We're now moving forward to slide nine. Talk about the guys.

Anticipating the most material impact of the shift will be associated with the back to school selling season, we expect a larger portion of back to school sales will land in our second quarter of this year on the flip side. The third quarter will have a smaller portion of back to school sales the quarterly impact of the week shift on reported fiscal 'twenty for comp sales and net sales is highlighted in the <unk>.

Robert J. Volke: Please note that Fiscal 2025 will end on February 1st, 2025 and will be comprised of 52 weeks versus the 53 weeks we just experienced in Fiscal 2024. A number of business and economic challenges we faced in Fiscal 24 will continue to impact our business in Fiscal 25. These challenges include the potential for inflation and interest rates to remain elevated, the continued use of selective promotional activity to drive traffic, ongoing wage pressures, a more cautious and selective consumer, and ongoing geopolitical conflicts. These factors contribute to the complexity and volatility in forecasting fiscal 25 results.

Robert J. Volke: On the last page of this morning's press release.

Robert J. Volke: Comparable sales are expected to be flat to negative low single digits for the year brick and mortar comparable sales are also expected to range from flat to negative low single digits. Both total e-commerce revenue for the full year and comparable E. Commerce revenue adjusted for the one week shift is anticipated to be up in the mid to high single digit range.

Robert J. Volke: Net new store growth is expected to be approximately 45% to 50 stores.

Robert J. Volke: First quarter is projected to have the lowest growth with net new units anticipated to be more evenly distributed across the remaining quarters.

Robert J. Volke: Margin expectations include a less impactful promotional environment and small leverage gains in freight and logistics, partially offset by headwinds in store occupancy. These factors are expected to drive approximately 40 to 70 basis points of improvement in the gross profit percentage in comparison to fiscal 'twenty four result.

Robert J. Volke: Our estimated full-year guidance for fiscal 2025 is as follows. Total net sales in fiscal 25 are anticipated to be flat to up approximately 2% compared to our full year Fiscal 24 results. Through the transition from a 53-week year in Fiscal 24 to a 52-week year in Fiscal 25, comparable sales for Fiscal 2025 will be compared to weeks 2 through 53 in Fiscal 24. We anticipate the most material impact of this shift will be associated with back-to-school selling. We expect a larger portion of back-to-school sales will land in our second quarter this year. On the flip side, the third quarter will have a smaller portion of back-to-school sales. The quarterly impact of the week shift on reported fiscal 24 comp sales and net sales is highlighted in the table on the last page of this morning's press release. Total comparable sales are expected to be flat to negative low single digits for the year.

Robert J. Volke: <unk> full year gross margin is anticipated to be in the range of 34, 2%.

Four 5% of net sales.

Robert J. Volke: SG&A spend of net sales is expected to increase by approximately 90 to 120 basis points in comparison to fiscal 'twenty four due to new store growth wage inflation increased incentive compensation and transaction fees and data processing costs.

Robert J. Volke: Our processing cost include the incremental investment in cloud based technology solutions.

Robert J. Volke: <unk> full year SG&A expense range is estimated to be 23, 9% to 24, 2% of net sales.

Robert J. Volke: Operating profit.

<unk> to be in the range of 7% to seven 4% of net sales a net decline of approximately 50 to 90 basis points in comparison to fiscal 'twenty four it.

Robert J. Volke: It is anticipated that will be debt outstanding on our line of credit for much of the year, Although we expect average daily borrowings to be lower than fiscal 'twenty. Four we believe peak borrowings will be tied mostly to the timing of receipts being up for peak selling seasons interest expense for the full year is projected to be approximately 10 20 basis points of net sales.

Robert J. Volke: Brick and mortar comparable sales are also expected to range from flat to negative low single digits. Both total e-commerce revenue for the full year and comparable e-commerce revenue adjusted for the one-week shift are anticipated to be up in the mid- to high-single digits. That new store growth is expected to be approximately 45 to 50 stores, with first quarters projected to have the lowest growth with net new units anticipated to be more evenly distributed across the remaining quarters.

Diluted earnings per share are anticipated to be in the range of $8 to $8 75.

Robert J. Volke: Using our estimated full year tax rate of between 22, 9%.

Robert J. Volke: 2% and an estimated weighted average diluted share.

Robert J. Volke: <unk> 11, 611 7 million.

Robert J. Volke: Capital expenditures are anticipated to be in the range of $65 million to $75 million with the largest share of this investment once again focused on new store growth Remodels relocations, new store signage and improving the consumer experience.

Robert J. Volke: Gross margin expectations include a less impactful promotional environment and small leverage gains in freight and logistics partially offset by headwinds and score occupancy. These factors are expected to drive approximately 40 to 70 basis points of improvement in the gross profit percentage in comparison to fiscal 2024 results. Estimated full-year gross margin is anticipated to be in the range of 34.2% to 4.5% of net sales. FG&A's FedOnet sales are expected to increase by approximately 90 to 120 basis points in comparison to Fiscal 24 due to new store growth, wage inflation, increased incentive compensation, transaction fees, and data processing. Data processing costs include incremental investment in cloud-based technology. The expected full year SG&A expense range is estimated to be 23.9% to 24.2% of net sales.

Robert J. Volke: Our capital allocation strategy continues to include share repurchases recurring quarterly dividends. In addition to the capital expenditures noted previously.

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

Speaker Change: Thank you. Thank you I would like to ask a question. Please press star one on your telephone keypad.

Speaker Change: Your line is in the question queue.

Speaker Change: Nathan.

Speaker Change: Thanks.

Nathan: Question from the queue and for participants using speaker equipment, it may be necessary to pick up your handset before pressing sorry.

Nathan: Our first question is from Mitch.

Mitch: With Seaport research. Please proceed.

Mitch: Hi, yes, thanks for taking my questions.

Mitch: So maybe I missed the comments in the release, but did you give your.

Mitch: Your fiscal 'twenty five outlook.

Mitch: A corner I believe in the past you've kind of given the breakout five percentage of the year do you have that.

Robert J. Volke: Hey, Ben it's Bob.

Robert J. Volke: Operating profit is expected to be in the range of 7% to 7.4% of net sales, a net decline of approximately 50 to 90 basis points in comparison to fiscal 24. Interest expense for the full year is projected to be approximately 10 to 20 basis points of net sales. Included earnings per share are anticipated to be in the range of $8 to $8.75, using an estimated 4-year tax rate of between 22.9% and 0.2% and an estimated weighted average dilute share of 11.6 to 11.7%.

Robert J. Volke: And we've kind of pulled that out this year I think we'll see a week shift that gets a little bit more challenging we don't think theres a huge amount of change within the quarter.

Robert J. Volke: I'll deal with the exception of what we mentioned on the prepared comments as far as back to school, but still expect Q1 and Q4 to be relatively similar to what we saw last year.

Robert J. Volke: That kind of right at the end of Q2 right at the beginning.

Robert J. Volke: Yes.

Robert J. Volke: Effectively.

Speaker Change: Okay and then on the.

We're side.

Speaker Change: Yes.

Down mid singles this quarter I think last quarter it was up low single.

Speaker Change: How do you explain that sequential softening I'm curious how much of that might have been seasonal.

Operator: Capital expenditures are anticipated to be in the range of $65-75 million, with the largest share of this investment once again focused on new store growth, remodels, relocation, new store signage, and improving the consumer experience. Our capital allocation strategy continues to include share repurchases, and recurring quarterly dividends, in addition to the capital expenditures noted previously. That concludes the prepared remarks. Operator, please open the line for questions. Thank you. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue.

Speaker Change: Versus anything else that youre seeing in the assortment between those two periods.

Speaker Change: Yeah, Hey, Matt just Jared good morning, yes.

Speaker Change: Yes, I think first and foremost obviously, we were up against a very significant comp.

Speaker Change: Really strong footwear results for from Us.

Speaker Change: Seasonal business was a challenge for sure but the primary driver was weakness at the end of the quarter.

Speaker Change: We got to the last week of December and January.

Speaker Change: Okay.

Speaker Change: But even more selective than they have been keeping something.

Speaker Change: Something <unk>.

Speaker Change: For the last couple of quarters once we got out of holiday.

Speaker Change: It was pretty clear that we're being super selective and unfortunately some of the.

Mitchel John Kummetz: If you would like to ask a question from the queue, and for a participant choosing speaker equipment, it may be necessary to pick up your handset before pressing star 2. Our first question is from Mitch. Let's support research. Uh, yeah, thanks for taking my questions. Um, so maybe I missed the comments or the release, but could you give your, uh, your fiscal 25 sales outlook? I believe in the past you've kind of given the breakout by percentage of the year. Do you have that?

Speaker Change: Some of the parts of our assortment in some of the things in the launch calendar were somewhat repetitive.

Speaker Change: And cut through.

Speaker Change: That was the real driver what happens in footwear.

Speaker Change: For the quarter.

Speaker Change: And then my last question, maybe just as a follow on to that.

Speaker Change: The weakness that you saw at the end of the quarter.

Is there any way you can kind of.

Speaker Change: Parse.

Speaker Change: By month or you'd be talking about how January performed versus November December and I'm curious if maybe some of that that weakness at the end of the quarter has carried over into February.

Robert J. Volke: Hey Mitch, Bob, we kind of pulled that out this year. I think with the week shift, it gets a little bit more challenging. We don't think there's a huge amount of change within the quarters, not to deal with the exceptional we mentioned in the prepared comments as far as back to school, but we still expect Q1 and Q4 to be relatively similar to what we saw last year. But we have that right at the end of Q2, right at the beginning of Q3, there will be shifts. In fact, Okay, and then on the footwear side... Down mid-singles this quarter. I think last quarter it was up low singles. How do you explain that sequential stopping?

Speaker Change: Yes, I mean, obviously, we don't really comment on intra quarter, but certainly the November December time period, we felt pretty good about our business and particularly strong and once we got out of holiday.

Speaker Change: Things started to materially slow down for US again end of December and into January.

Speaker Change: Alright, Thanks, guys. Good luck.

Speaker Change: Thank you.

Speaker Change: Our next question is from Justin <unk> with Baird. Please proceed.

Speaker Change: Hey, good morning, everyone. It's Justin Klaver, thanks for taking the questions.

Justin E. Kleber: Bob first just.

Jared S. Briskin: I'm curious you know how much of that might have been seasonal versus anything else that you were seeing in the assortment between those two periods? Yeah, and that's Jared. Yes, I think, you know, first and foremost, obviously, we were up against a very significant challenge for their really strong aware results from us. Seasonal business was a challenge, for sure, but the primary driver was weakness at the end of the day. We got to the last week of December in January.

Justin E. Kleber: The revenue related to the change in gift card redemptions can you just walk through those numbers again, you cited I want to make sure I got those are correct and then just.

Justin E. Kleber: Was that always in the guidance or was that was that not in the guidance.

Justin E. Kleber: Yes.

Justin E. Kleber: Absolute dollar amount impacted revenue was $3 $5 million.

Justin E. Kleber: Go back to make sure I hope I think correctly there. So again as I said earlier and that is meant to get into too much accounting mumbo jumbo, but obviously if you look at some historical patterns and felt that we were under recognized and a gift card breakage totaled $3 5 million was recorded in Q4.

Jared S. Briskin: They were really even more selective than they have been, but that's something we've been seeing here for the last couple of quarters. But once we got out of holiday, it was pretty clear they were being super selective. And unfortunately, some of the... Some of the parts of our assortment and some of the things in the launch calendar were somewhat repetitive and really didn't cut through. I was the real driver of what happened with the players.

Justin E. Kleber: Impacted the quarter by about 23 impacted the full year by about 22 and by the time, we issued our third quarter results and guidance. We were already working on that absolutely had a pretty solid estimate of efficacy.

Justin E. Kleber: Going into the fourth.

Justin E. Kleber: Okay.

Jared S. Briskin: And then my last question, maybe just as a follow-on to that, you know, the weakness that you saw at the end of the quarter, is there any way you can kind of maybe parse it by month, or maybe talk about how January performed versus November and December? And I'm curious if maybe some of that weakness at the end of the quarter is carried over into February. Yeah, I mean, obviously, we don't really comment on the interquarter, but certainly, in the November and December time period, we felt pretty good about our business and particularly strong. And once we got out of the holiday, things started to materially slow down for us again at the end of December and into January. All right. Thanks, guys. Good luck!

Gotcha, and then the view that the.

Justin E. Kleber: Promotional.

Justin E. Kleber: Environment I guess in this upcoming year is going to.

Justin E. Kleber: It's going to moderate obviously, the fourth quarter seeing seemed quite promotional and I guess, what gives you confidence that promotions will.

Justin E. Kleber: We will lessen this year is that just what youre seeing not only within your inventory, but also inventories across the channel just just any color there would be helpful.

Speaker Change: Adjusted Morningstar's, yes, so two parts I mean, the first and foremost our team worked incredibly hard.

Speaker Change: Last year in particular in the back half of the year to get our inventory levels right sized and to get us in positions.

Speaker Change: Credit, bringing content of our inventory.

Jared S. Briskin: Thank you. Our next question is from Justin Keebler with Baird. Hey, good morning, everyone. It's Justin Kleber.

Speaker Change: Throughout fiscal 'twenty five so we feel great about that so while there is still some inventory that's elevated with the marketplace and I believe there'll still be some.

Justin E. Kleber: Thanks for taking the questions. Bob, first, just the revenue related to the change in gift card redemptions. Can you just walk through those numbers again?

Speaker Change: Yes.

Speaker Change: Based on where our inventory is the work that was done how clean the inventory.

Has.

Speaker Change: The support we're getting from the vendor community.

Robert J. Volke: You cited I want to make sure I got those correct. And then just was that always in the guidance, or was that not in the guidance? Yeah, so the absolute dollar amount impacted revenue was $3.5 million. I'll go back to make sure I just pulled my things correctly here. So, again, as I said earlier, not to get into too much County Mumbo-Jumbo, but obviously, we looked at some historical patterns and felt that we were under-recognized in that gift card breakage. So, the $3.5 million was recorded in Q4. That impacted the quarter by about 23 cents and impacted the full year by about 22.

Speaker Change: Feel like our ratio of full price selling will be much higher where we still might have some promotions from a competitive standpoint in the marketplace, but.

Speaker Change: We will have significantly less markdowns that were dealing with as a result of old inventory.

Speaker Change: Yes.

Speaker Change: Color. Thanks for that Jerry and then last question for me guys just on the.

Speaker Change: Maybe Mike or can you just expand on some of the investments you alluded too specific.

Speaker Change: Typically the customer facing technologies, what changes are going to be visible.

Speaker Change: The consumer and then.

Speaker Change: You talked about these enhancing your profitability longer term.

Speaker Change: Okay. Thank you would expect these investments.

Speaker Change: Our bending the curve on profitability.

Speaker Change: Yes, I think it is.

Robert J. Volke: And by the time we issued our third quarter results and guidance, we were already working on that. So, we had a pretty solid estimate on that. Okay, gotcha.

Speaker Change: There's a couple different this is Bob by the way is a couple of different aspects of this one is certainly the stuff you see more of a front of house, which would be the digital experience in some of the technology that we've got in the stores.

Speaker Change: I don't think are our associates.

Jared S. Briskin: And then the view that the promotional... environment, I guess, in this upcoming year is going to, it's going to moderate. Obviously, the fourth quarter seems quite promotional. And I guess what gives you confidence that promotions will, um, well, lesson this year is that just what you're seeing not only within your inventory but also inventories across the channel. Just, any color there would be helpful. Hi, Justin. Good morning. It's Jared.

Speaker Change: Fishing.

Speaker Change: Another big chunk of this is what we've done in the back office. So we've added.

Speaker Change: More sophisticated financial human resource systems as well as now we're upgrading all of our merchandising.

Speaker Change: So the.

Speaker Change: The expectation is that we're still kind of in that investment mode, and we're starting to get some benefits from some of the things we've invested in over say 12 to 18 months ago.

Speaker Change: In process of putting some of those things in place, we expect that leverage will Smith.

Speaker Change: Fiscal <unk> forward.

Got it thanks, guys best of luck.

Speaker Change: Thank you.

Speaker Change: Next question is from.

Speaker Change: Thanks, Carey with Bank of America.

Carey: Alright, Thanks for taking my question I just wanted to follow up on the first question that was asked sort of within the confines of the flat to down the comp guidance for the year I just wanted to maybe clarify some of your comments, Bob. So you say that <unk> and <unk> similar to last year with them by that you're sort of.

Jared S. Briskin: Yeah, so two parts. I mean, first and foremost, our team worked incredibly hard throughout last year and, in particular, in the back half of this year, to get our inventory levels right sized and to get us in position to, you know, have an incredible content for our inventory, you know, throughout fiscal 25. So, we feel great about that. So, while there's still some inventory that's elevated in the marketplace, then likely, there'll still be some. Based on where our inventory is, the work that was done, how clean the inventory has become, the support we're getting from the vendor community, we feel like our ratio of full price settling will be much higher, where we still might have some promotions from a competitive standpoint in the marketplace, but we' That's a great color!

Thinking about those as flat.

Carey: Flat comps.

Speaker Change: And those corners of <unk> energy.

Speaker Change: Pulp foreign impact will spend and then maybe <unk>.

Robert J. Volke: It's out of the quarter is that how we get to that.

Robert J. Volke: Guide for the year.

Speaker Change: I was thinking more about the percentage of sales that fall into each of the quarters. So.

Speaker Change: It wasn't really referring to.

Speaker Change: Typically.

Speaker Change: <unk>.

Speaker Change: Obviously, some alignment with those numbers.

Speaker Change: We're really just looking for it although revenue is going to spread across.

Speaker Change: The percent of revenue Youll see couponing.

Speaker Change: Last year two of that.

Speaker Change: Sure.

Speaker Change: And.

Speaker Change: Early part of Q3.

Speaker Change: Got you.

Speaker Change: Okay.

Speaker Change: And then I wanted to.

Speaker Change: Asks about the store openings.

Robert J. Volke: Thanks for that, Jared. And the last question from you guys, just on the So maybe Mike, or can you just expand on some of the investments you alluded to specific, You know, typically customer-facing technologies, you know, what changes are going to be visible to the consumer? And then you talked about these enhancing your profitability longer term. Here's what you would expect the investment to look like, bending the curve on profitability. And I think it's, there's a couple different, this is Bob, by the way, there's a couple different aspects of this. One is certainly the stuff you see more in the front of house, which would be the digital experience.

Speaker Change: More.

Speaker Change: Maybe just talk about what youre seeing in terms of your new store performance. If you look at some of the Porsche opened in 2023 for instance are you seeing those sort of ramp in the same way as previous cohorts.

Speaker Change: Maybe talk a little bit about where the new stores are concentrated are these new markets for you guys are sort of mostly infill.

Speaker Change: Market. Thank you.

Speaker Change: Hey, good morning dialysis Baird, Yes look we're really pleased with our new stores. The performance has been exceptional.

Faster.

Speaker Change: Historically, one of the challenges we've had is getting them open.

Robert J. Volke: Some of the technology that we've got in the stores, we need to try to take care of. Thank you. Thank you. Thank you.

Speaker Change: Frankly.

Speaker Change: Some delays within permitting inspections things of that nature has presented a little challenged teams worked incredibly hard to redefine our timelines and processes to take them.

Robert J. Volke: Thanks, guys. Best of luck. Thank you. Alright, thanks for taking my questions. Just to follow up on the first question that was asked, sort of within the confines of the flat to downloadable digit comp guide for the year, I just wanted to maybe clarify some of your comments, Bob.

Better again.

Speaker Change: 45% this year.

Speaker Change: And then grow that number.

Speaker Change: Over the next years absolutely.

Robert J. Volke: So, did you say that 1Q and 4Q, similar to last year, would that imply that you're sort of thinking about those Black comps, and in those quarters, got two Qs a bit better to pull forward and back to full spend, and then maybe three Qs a bit worse out of the quarter? Is that sort of how we get to that Guide for the Year?

Speaker Change: Turning to markets and infill, we tend to target when new market a year.

Speaker Change: Two years ago.

Speaker Change: Las Vegas market not on the strip.

Last year it was Milwaukee.

Speaker Change: Lineup of funds in the market again.

Speaker Change: This year as well and then the rest is infill.

Speaker Change: As we've said before that.

Speaker Change: An opportunity to grow the chain, we still feel that we can double the change over time.

Robert J. Volke: I'll tell you more about the percent of sales this fall. Obviously, some alignment with those numbers, or, I'm really just looking forward to how the revenue is going to spread across the place, and I believe that the percent of revenue you'll see is going to be a lot higher than the percent of revenue you'll see last year. Thank you. The early part gotcha, um, And then I wanted to...

Speaker Change: But very very pleased with our new stores and the way they're performing.

Speaker Change: That's incredibly helpful Best of luck going forward. Thank.

Speaker Change: Thank you.

Speaker Change: Our next question.

Speaker Change: Fernandez with Telsey group. Please proceed.

Fernandez: Hi, Good morning, Thanks for taking my questions I wanted to ask about the product trends.

Michael E. Longo: I'm going to ask you about the store opening a bit more. Maybe just talk about what you're seeing in terms of your new store performance. If you look at some of the stores you opened in 2023, for instance, are you seeing this sort of ramp in the same way as previous cohorts? Maybe talk a little bit about where the new stores are concentrated. Are these new markets for you guys, or are they mostly in-built? Thank you. Good morning Alex.

Fernandez: Okay.

Fernandez: All of the launches.

Fernandez: Late in the quarter were replenished didn't really hit it with customers. So how do you feel about the med.

Fernandez: <unk> coming in this year.

Fernandez: And access.

Michael E. Longo: Alex, we're really pleased with our new stores. The performance has been exceptional. They're ramping up faster than we've seen historically, and one of the challenges we've had is getting them open. Frankly, you know, some delays with them in getting permits, inspections, things of that nature have presented a little challenge. But incredibly hard to redefine our timelines and processes to take a better look at our, you know, 45 to 50 this year and then grow that number over the next few years. Absolutely. In terms of markets and infill, we tend to target one new market a year. 2 years ago, it was the Las Vegas market, not on the strip. Last year, it was New York.

Fernandez: Brands that are more trend right doing better currently.

Speaker Change: Yes, so I think two.

Speaker Change: Try to separate the question a little bit it's Jared good morning, Yeah, I think first and foremost.

With regard to partnerships with vendors or access points or allocation, we feel great about where we are obviously, we've reduced the inventory significantly 18%. We expect that we can maintain inventory.

Speaker Change: Bubble, but with a much higher concentration of the best product in the high Tech products, we feel great about that.

Michael E. Longo: We'll wind up with one new market again this year as well, and then the rest is infill. And as we've said before, we've got significant opportunity to grow the chain. We still feel that we can double the chain over time, but we are very, very pleased with our new stores and the way they're performing. That's incredibly helpful.

Speaker Change: Don't feel overall from an innovation pipeline, which is loading a little bit slower than we'd like.

There are certainly some things that move us investment pools that we're seeing some nice results.

Speaker Change: Whether some of those things are scalable and that is the things that we're trying to determine.

Michael E. Longo: Best of luck going forward. Thank you. Our next. Hi, good morning.

Speaker Change: And more and more of those will come in throughout the year. So we're starting to feel.

Jared S. Briskin: Thanks for taking my questions. I wanted to ask about product trends. You mentioned in the remarks some of the launches late in the quarter where Repetis didn't really hit it with customers. So, how do you feel about the level of newness coming this year in access to products and brands that are more trendfied or are doing better currently? Yes, I think, you know, two. I'll try and separate the question a little bit. It's Jared.

Speaker Change: Some of the innovation start to kick in a little bit more we have more things that we can make investments in.

Speaker Change: And our team really aggressive in trying to find some of those new things that we.

Speaker Change: We can we can get good tests on and then hopefully scale as we get into the latter part of this year I think for next year. So.

Speaker Change: Things are starting to materialize.

Jared S. Briskin: Good morning. Yeah, I think first and foremost. With regard to partnerships and vendors, our access points, our allocation, we feel great about where we are. Obviously, we've reduced the inventory significantly, you know, 18%. We expect that we can maintain inventory at this level, but with a much higher concentration of the best product and the highest quality product. So we feel great about that.

Speaker Change: We'd like to see the innovation pipeline go a little bit faster.

Speaker Change: But again, we'll feel good about where we're positioned.

Speaker Change: And our partnerships with all the key vendors.

Speaker Change: And then the on the apparel side.

Speaker Change: Ben Hoff.

Speaker Change: Many quarters now how do you feel about the level of inventory there potential stabilization in that category.

Jared S. Briskin: Still feel overall from the innovation pipeline, things are going a little bit slower than we'd like. There are certainly some things that the team has invested in that we're seeing some nice results in. Whether some of those things are scalable or not is still something that we're trying to determine.

Benjamin Ashley Knighten: Yes, I think overall, our our inventory in apparel is in great shape.

Benjamin Ashley Knighten: We're incredibly hard at that.

Benjamin Ashley Knighten: We're very confident in that level.

Jared S. Briskin: And more and more of those will come in throughout the year. So we're starting to feel some of the innovations start to kick in a little bit more. We have more things that we can make investments in. Our team's been really aggressive in trying to find some of those new things that, you know, we can get good tests on and then hopefully scale as we get into the latter part of this year and into next year. So, things are starting to materialize. But we'd like to see the innovation pipeline go a little bit faster.

Benjamin Ashley Knighten: Inventory in the marketplace both of those heavy.

Benjamin Ashley Knighten: So we are still fighting some of that but we're absolutely seeing some things starting to materialize, particularly in our street wear business and in our denim businesses as examples.

Benjamin Ashley Knighten: That we feel can become significant drivers for us as we get into the second half of the year.

Benjamin Ashley Knighten: And one more if I can I wanted to ask about the SG&A increase is there any.

Jared S. Briskin: But again, we'll feel good about where we're positioned and our partnerships with all the key vendors. And then on the apparel side, that's been soft for, you know, for many quarters now; how do you feel about the level of inventory there, potential stabilization in that category? Yeah, I think, you know, overall, our inventory and apparel is in great shape. Teams work incredibly hard at that.

Benjamin Ashley Knighten: Any way you can bucket sort of.

Benjamin Ashley Knighten: The category.

Benjamin Ashley Knighten: More than 9200 basis points include too much.

Benjamin Ashley Knighten: What are the biggest chunks.

Speaker Change: So just to understand.

Jared S. Briskin: So we're, we're very confident in, you know, that level of inventory; the marketplace doesn't feel as heavy. So, we're still fighting some of that, but we're absolutely seeing some things starting to materialize, particularly in our streetwear business and in our denim businesses as examples that we feel can become significant drivers for us as we get into the second half of the year. And one more, if I can, I wanted to ask about the SG&E increases. Is there any way you can bucket sort of the categories, you know, what's more within the 90 to 100 basis points increase? What, you know, what are the biggest chunks just to understand? If it's incentive comp or the investment in the stores, maybe you can break it down for us a little more. Yeah, again, this is Bob and Cristina, so...

Is that incentive comp or the investments in the stores, maybe you can break it down for us a little more.

Speaker Change: Yes.

Speaker Change: Again, 5% so.

Speaker Change: I think again when you look at kind of the biggest headwinds we're dealing.

Speaker Change: Still putting a lot of wage inflation at the store level.

Speaker Change: It came off a year, we're probably estimating somewhere in the neighborhood of 6% of wage increase we think that number is going to be relatively close to that maybe slightly lower than that as we move forward. So that is still something that we're obviously.

Speaker Change: Accounting for going forward. The other thing is we are investing like I said in some of the back office technologies.

Speaker Change: And those things are bringing in SG&A cost traditionally those might've been thank you invested capital dollars and went through depreciation, but because of the cloud based systems. The accounting rules require us to run that through our operating expense Thats, what we refer to this data processing bucket and that would be things like our ERP systems, and our merchandising systems and the last piece you did mentioned as we.

Robert J. Volke: I think, again, when you look at kind of the biggest headwinds we're dealing with is, you know, still fighting a lot of wage inflation at the store level. So we came off a year where we're probably estimating somewhere in the neighborhood of 6% wage increase. We think that number is going to be relatively close to that, maybe slightly lower than that as we move forward.

Speaker Change: Set ourselves some pretty aggressive targets for internal compensation purposes.

Speaker Change: We have obviously tried to live up to those expectations.

Robert J. Volke: So that is still something that we're obviously, you know, accounting for going forward. The other thing is that we are investing, like I said, in some of the back office technologies. And those things are bringing in FG&A costs. Traditionally, those might have been things you invested capital dollars in and went through depreciation.

Speaker Change: At a little bit of a shortfall last couple of years, we're putting a full value back into that and that's why we talked about incentive compensation. We've also restructured a lot of targets within the store operations group.

Speaker Change: Again to make this much more aligned with what our goals are so we do feel that there is going to be some upside opportunity for this for the employees to have some additional incentive comp and this is Mike. So we'll have a couple of comments on the labor side.

Robert J. Volke: But because they're cloud-based systems, the accounting rules require us to run that through our operating expense. So that's why we refer to this data processing bucket. And that would be things like, you know, our ERP systems and our merchandising. And the last piece I'd like to mention is that we have set ourselves some pretty aggressive targets for internal compensation purposes. And we have obviously tried to live up to those expectations.

Michael E. Longo: He'll be followed by then but it's the second largest expense on the P&L side from cost of goods sold so it does.

Michael E. Longo: Occupy a lot of our time.

Michael E. Longo: But it's more than just cost. It's also the consumer experience. So then you want to add some flavor to this and I will tag ALM Cassini other spin.

Robert J. Volke: We have had a little bit of a shortfall in the last couple of years, so we're putting full value back into that, and that's why we talk about incentive compensation. We've also restructured a lot of targets within the store operations group, again, to make this much more aligned with what our goals are, so we do feel that there's going to be an upside opportunity for the employees. And this is Mike.

Michael E. Longo: So some of what Bob and Mike said, we have seen wage pressure kind of throughout the year continued in Q4.

Michael E. Longo: The same pace release, we saw in the first three quarters, all but one of the ways. We wanted this is to continue investing in our mobile environment.

Michael E. Longo: That has contributed to an increase in productivity, but it also improves the consumer experience and Thats, where our real focus has been.

Michael E. Longo: So we'll have a couple of comments on the labor side. I'll be followed by Ben, but, you know, it's the second largest expense on the P&L, aside from cost of goods sold. So it does occupy a lot of our time, but it's more than just cost. It's also the consumer experience. So, Ben, would you like to add some flavor to this?

Michael E. Longo: We do think wage will soften a bit this year, but it will be similar to last year.

Michael E. Longo: That mobile platform has really helped us in a couple of different ways and really taking the form of moving work to the mobile devices that we have in our stores that includes the task that we have to do with sales associates on the floor.

Benjamin Ashley Knighten: Yeah, and I'll add to some of what Bob and Mike said. You know, we have seen wage pressure kind of throughout the year. It continued in Q4 at about the same pace, really, as we saw in the first three quarters.

Michael E. Longo: Also includes additional tools to really help the customer.

Michael E. Longo: Our associates and customers are used to having access to their devices in their day to day to day life, and we are simply kind of extending that to our store environment that allows us to do a couple of things number one it allows us to hire train and retain the right associates in our stores, while also improving the store experience for the consumer.

Benjamin Ashley Knighten: But one of the ways we've, you know, wanted this is to continue investing in our mobile environment. That has contributed to an increase in productivity, but it also improves the consumer experience, and that's where our real focus has been. We do think wages will soften a bit this year, but they'll be similar to last year.

Michael E. Longo: That continues in the current year will continue in the future and we do expect to see dividends.

Benjamin Ashley Knighten: That mobile platform has really helped us in a couple of different ways, and it's really taken the form of moving work to the mobile devices that we have in our stores. That includes the tasks that we have to do with sales associates on the floor, but it also includes additional tools to really help the customer. At the end of the day, you know, our associates and customers are used to having access to their devices and their day-to-day life, and we are simply kind of extending that to our store environment. That allows us to do a couple of things. Number one, it allows us to hire, train, and retain the right associates in our stores while also improving the store experience for the consumer.

Michael E. Longo: Even more so in the future, particularly around productivity and customer experience.

I appreciate all the color. Thank you.

Thank you.

Michael E. Longo: Our next question is from Sam Poser with Williams trading. Please proceed.

Samuel Marc Poser: Good morning, everybody I have a handful please.

Samuel Marc Poser: I'm, just going to start with the easy stuff.

Can you give us.

Samuel Marc Poser: Sharon just what were the comps by month.

Samuel Marc Poser: Good.

Jesse comment we don't give the comps by month, but again as I said in November December were pretty strong we felt pretty good about it.

William G. Quinn: That continues in the current year and will continue in the future, and we do expect to see dividends even more so in the future, particularly around productivity in the future. I appreciate all the callers. Thank you. Our next question is from Sam Poser with William Treacy. Good morning, everybody. I have a handful, please.

Jesse: Last week in December and January really really were very difficult and the primary driver I mean are we talking about like low to mid single digit comps falling off to down doubles and that left in that last six weeks.

Jesse: Say more flattish.

Jesse: Again, we're up against the plus 15 so.

Samuel Marc Poser: I'm just going to start with the easy stuff. Can you give us, Jared, just what were the comps by month? and We don't give the conspiring, but again, as I said, November, December, we were, we were pretty strong. We felt pretty good about it. And, uh, the last week of December and January really, really were very different, in the primary driver. I mean, are we talking about, like, low- to mid-single-digit comps falling off to double-digits in those last six weeks? I would say more flattish.

Jesse: Certainly had a big hurdle to get over from a comp standpoint.

Jesse: So flattish and then it went through all of that.

Jesse: Okay.

Speaker Change: Your your E Commerce business is very good but youre short your store comps aren't as good and youre sort of guiding for that to continue is there more you can be doing using the.

Speaker Change: <unk> your digital Omnichannel.

Speaker Change: Work to drive more people into the stores to help the store comps.

Jared S. Briskin: You know, again, we're up against the plus 15, so it's certainly had a big hurdle to get over from a comp standpoint, a flat ish, and then it went the wrong way. Your e-commerce business is very good, but your store comps aren't as good, and you're sort of guiding for that to continue. Is there more you can be doing using your digital omnichannel work to drive more people into the stores to help your store comps? The short answer is yes.

Speaker Change: Short answer is yes, bill you want to give a little more detail than that yeah absolutely.

William G. Quinn: Hi, Sam Good morning. This is now so yes definitely omnichannel I can drive a lot of traffic to the stores.

William G. Quinn: A few examples in our buy online pickup in store that definitely drives traffic and we see a good attachment.

William G. Quinn: Bill, you want to give a little more detail on that? Yeah, absolutely. Hi, Sam. Good morning. This is Bill.

Speaker Change: Saw that increase and that continues to increase Thats. One. One example, our loyalty program is by far our largest omnichannel program that drives over 60% of our sales, we're making significant investments in that so in terms of acquisition as well as retention.

William G. Quinn: So, yeah, definitely, you know, OmniChannel can drive a lot of traffic to the stores. I'll give you a few examples: buy online, pick up in store. That definitely drives traffic, and we see a good attachment. We saw that increase, and that continues to increase. So that's one example.

William G. Quinn: Our loyalty program is by far our largest OmniChannel program that drives over 60% of our sales. We're making significant investments in that. So, in terms of acquisition,

Speaker Change: And that will drive store traffic as well.

Speaker Change: Another thing that we're making investments this year is around mobile.

Speaker Change: In particular around our launch process and how to make that even better on day, one and then the following day. So thats another investment that we're making to drive store traffic.

William G. Quinn: And that will drive store traffic as well. Another thing that we're making an investment in this year is around mobile, in particular around our launch process, how to make that even better on day one and then the following day. So that's another investment that we're making in the drive store. And you might want to mention some of the innovation at Raffle without giving too much away. Yeah, yes, certainly. There is, on day one, depending on the launch, a certain amount of unsold items.

Speaker Change: You might want to mention some of the innovation and raffle without giving too much away.

Speaker Change: Yes, yes, certainly.

Speaker Change: There is on day, one depending on the launch.

Speaker Change: The amount of unsold items.

William G. Quinn: And so we're putting in a new process, as well as with our customers, new marketing, that is going to increase sell-through on that day one and then the following day. So more to come on that, but we have a lot of exciting innovations around the launch process. But there's still customer friction.

Speaker Change: And so we're putting in new processes as well as with our customers new marketing.

Speaker Change: That are going to increase sell through on that day, one and then the following day so more to come on that but we have a lot of exciting innovations around the launch process theres still customer friction there and thats something thats very important to our customers is something that we're going to invest in.

William G. Quinn: And that's something that's very important to our customers and something that we're going to invest in. Thank you. Amen. Then you, this is just not directly related to business, but there was a lot of moving around with your earnings dates. And I mean, I wonder if you are, is there, are you, working or involved in any M&A right now?

Speaker Change: Thank you and then.

Speaker Change: Okay.

Speaker Change: This is just not directly related to business, but there was a lot of moving around with your earnings dates and I Wonder are you.

Speaker Change: Is there are you are you working or involved in any M&A right now.

Michael E. Longo: So, we don't entertain those sorts of questions, but to your first part of the question, The moving of the earnings date was my decision. We were trying to collect additional data aside from what we normally get. You know, last year we probably went a week too early, and this year we backed it up. So that was the origin of it. Well, I mean, we had originally heard that it was going to be on the 28th, and then it seemed to move towards the 15th.

Speaker Change: We don't entertain those sorts of questions, but to your first part of the question.

Speaker Change: The moving of the earnings State was my decision we were trying to collect additional data.

Speaker Change: Aside from what we normally get last year, we probably went a week too early in this year, we backed it up so that was the origin of it.

Speaker Change: Well I mean, we had originally heard that it was going to be on the 28 and then it seemed to move.

Speaker Change: Towards the 15th so I'm just trying to understand by mine.

Samuel Marc Poser: So I'm just trying to understand. Ah, okay. All right. Thank you very much. Thank you. We have reached the end of our question and answer session. I would like to turn the conference back over to management for closing comments.

Speaker Change: Okay.

Speaker Change: Alright, Thank you very much.

Thank you.

Speaker Change: We have reached the end of our question and answer session I would like to turn the conference back over to management for closing comments. Thank you very much for your time and attention today, we always appreciate the opportunity to talk about our business than to say thanks to our sales associates in the stores. The people who've worked so hard and our distributions.

Michael E. Longo: Thank you very much for your time and attention today. We always appreciate the opportunity to talk about our business and to say thanks to our sales associates in the stores, the people who work so hard in our distribution center, and the people who work in the store support center. They're the reason we get in here every day and work as hard as we do so we can do a good job for our customers.

Speaker Change: Sooner than the people who.

Speaker Change: Work in the store support center. They are the reason we get in here every day and work as hard as we do so we can do a good job for our consumers. So thank you again, we look forward to seeing you in Q2.

Operator: So thank you again. We look forward to seeing you in Q2. Thank you. This will conclude today's conference. You may disconnect your lines at this time, and thank you for your participation.

Speaker Change: Thank you. This does conclude today's conference you may disconnect. Your lines at this time and thank you for your participation.

Speaker Change: [music].

Speaker Change: Okay.

Speaker Change: Okay.

Okay.

Speaker Change: Yes.

Speaker Change: [music].

Speaker Change: Okay.