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Buckle (NYSE:BKE)

Q2 2012 Earnings Call

August 16, 2012 10:00 am ET

Executives

Karen B. Rhoads - Director and Member of Executive Committee

Thomas B. Heacock - Treasurer and Corporate Controller

Dennis H. Nelson - Chief Executive Officer, President, Director and Member of Executive Committee

Robert M. Carlberg - Vice President of Men's Merchandising

Analysts

Paul Alexander - BofA Merrill Lynch, Research Division

Margaret B. Whitfield - Sterne Agee & Leach Inc., Research Division

Simeon A. Siegel - JP Morgan Chase & Co, Research Division

John D. Kernan - Cowen and Company, LLC, Research Division

Travis Williams - Stephens Inc., Research Division

Edward J. Yruma - KeyBanc Capital Markets Inc., Research Division

Adrienne Tennant - Janney Montgomery Scott LLC, Research Division

Janine M. Stichter - Telsey Advisory Group LLC

Operator

Ladies and gentlemen, we do appreciate your patience. And welcome to the Buckle Conference Call.

Members of the Buckle's management on the call today are Dennis Nelson, President and CEO; Karen Rhoads, Vice President of Finance and Chief Financial Officer; Pat Whisler, Vice President of Women's Merchandising; Bob Carlberg, Vice President of Men's Merchandising; Kyle Hanson, Corporate Secretary and General Counsel; and Tom Heacock, Treasurer and Corporate Controller.

As they review the operating results for the second quarter, which ended July 28, 2012, they would like to reiterate their policy of not giving future sales or earnings guidance and have the following Safe Harbor statement.

Safe Harbor statement under the Private Securities Litigation Reform Act of 1995. All forward-looking statements made by the company involve material risks and uncertainties and are subject to change based on factors, which may be beyond the company's control. Accordingly, the company's future performance and financial results may differ materially from those expressed or implied in any such forward-looking statements. Such factors include, but are not limited to, those described in the company's filings with the Securities and Exchange Commission. The company does not undertake to publicly update or revise any forward-looking statements, even if experience or future changes make it clear that any of projected results, expressed or implied therein, will not be realized.

Additionally, the company does not authorize the reproduction or dissemination of transcripts or audio recordings of the company's quarterly conference calls without its expressed written consent. Any unauthorized reproduction or recording of the call shouldn't be relied upon, as the information may be inaccurate.

At this time, this conference is being recorded. And I would now like to turn the conference over to our host, Karen Rhoads. Please go ahead.

Karen B. Rhoads

Thank you. Good morning, everyone, and thank you for joining the call. Our August 16, 2012 press release reported that net income for the second quarter that ended July 28, 2012 was $23.2 million or $0.49 per share on a diluted basis. That was down 1.4% from net income of $23.6 million or $0.50 per share on a diluted basis for the prior year second quarter that ended July 30, 2011. Our year-to-date net income for the 26-week period that ended July 28, 2012 was $61 million or $1.28 per share on a diluted basis, which was up 7% from net income of $57 million or $1.21 per share on a diluted basis for the 26-week period that ended July 30, 2011.

Our net sales for the 13-week second quarter increased 1.5%, to $215.5 million compared to net sales of $212.4 million for the prior year second quarter. Comparable store sales for the quarter decreased just 0.8%, and online sales, which are not included in comparable store sales, increased 12.1%, to $16.0 million.

Net sales for the 26-week year-to-date period increased 5.9%, to $479.2 million compared to net sales of $452.5 million for the same period in the prior year.

Comparable store sales for the year-to-date period increased 3.6%, and online sales, which again are not included in comparable store sales, increased 13.7%, to $35.7 million. Gross margin for the quarter was 40.1%, down approximately 90 basis points from 41% for the second quarter last year. The decline was driven by the deleveraging of certain buying, occupancy and distribution costs, which had about a 75 basis point impact and by a 25 basis point reduction in merchandise margins, which were partially offset by a reduction in expense related to our incentive bonus accrual.

For the year-to-date period, gross margin was 41.9%, down approximately 10 basis points from 42.0% for the same period last year. The decline was driven by a slight reduction in merchandise margins.

Selling expense for the quarter was 19.2% of net sales, which was a reduction of approximately 80 basis points from the second quarter of fiscal 2011. The reduction was driven by decreases as a percentage of sales in expense related to the incentive bonus accrual and bank card fees. For the year-to-date period, selling expense was 18.3% of net sales, which was a reduction of approximately 50 basis points from the same period last year. The reduction was driven by decreases as a percentage of net sales in expense related to the incentive bonus accrual and bank card fees.

General and administrative expense for the quarter was 4% of net sales, up approximately 30 basis points from the second quarter of fiscal 2011. Increases in expense related to our accrued vacation pay and equity compensation expense were partially offset by a reduction as a percentage of net sales in expense related to the incentive bonus accrual and certain other general and administrative expenses. For the year-to-date period, general and administrative expenses were 3.9% of net sales, up approximately 20 basis points from the same period last year. Increases in expense related to accrued vacation pay and equity compensation expense, and these expenses were partially offset by reductions as a percentage of net sales in expense related to our incentive bonus accrual and, again, certain other general and administrative expenses.

Our operating margin for the quarter was 16.9% compared to 17.3% for the second quarter of fiscal 2011. For the year-to-date period, our operating margin was 19.7% compared to 19.5% for the same period last year.

Other income for the quarter was $400,000, which compares to about $0.5 million for the same period of fiscal 2011. And other income for the year-to-date period was $2.2 million compared to $2.1 million last year.

Income tax expense as a percentage of pretax net income was 36.8% for the second quarter of both fiscal 2012 and 2011, bringing net income to $23.2 million for fiscal 2012 versus $23.6 million for fiscal 2011. Year-to-date income tax expense was also 36.8% for both fiscal 2012 and 2011, bringing year-to-date net income to $61 million for fiscal 2012 compared to $57 million for fiscal 2011, an increase of 7%.

Our press release also included a balance sheet as of July 28, 2012, which included the following: inventory of $124.5 million, which was down approximately 2% from inventory of $126.8 million at the end of the second quarter of fiscal 2011; and total cash and investments of $233.4 million, which compares to $236.5 million at the end of fiscal 2011 and $198.1 million at the same time a year ago.

As of the end of the quarter, inventory on a comparable store basis was down approximately 3%, and total markdown inventory was up compared to the same time a year ago. And increase in inventory in the 20% off category was partially offset by a reduction in inventory in the 1/3-off category.

We also ended the quarter with $173.3 million in fixed assets, net of accumulated depreciation. Our capital expenditures for the quarter were $10.8 million, and depreciation expense was $8.3 million. For the year-to-date period, our capital expenditures were $19.6 million and depreciation expense was $16.2 million. Year-to-date capital spending is broken down as follows: $18.1 million for new store construction, store remodel and store technology upgrade; and $1.5 million for capital spending at the corporate headquarters and distribution center.

We currently expect our fiscal 2012 capital expenditures to be in the range of $30 million to $34 million. For the quarter, UPT decreased approximately 1%, the average transaction value increased approximately 3.5% and our average unit retail increased approximately 4.5%. For the year-to-date period, UPTs decreased approximately 1.5%, the average transaction value increased 5.5% and the average unit retail increased approximately 7%.

Buckle ended the quarter with 439 retail stores in 43 states, and that is compared to 427 stores in 41 states at the end of the second quarter of fiscal 2011. Additionally, our total square footage was 2.196 million square feet as of the end of the quarter compared to 2.138 million square feet at the same time a year ago.

And at this time, I'd like to turn the call over to Tom Heacock, our Corporate Controller and Treasurer.

Thomas B. Heacock

Good morning, and thanks for joining us. I'd like to start by highlighting the performance from our various merchandise categories that led to our 1.5% net sales increase for the quarter.

Men's merchandise sales for the quarter were up approximately 4%, with strong categories including denim, knit shirts, active apparel and accessories. Average denim price points decreased from $88.80 in the second quarter of fiscal 2011 to $87.80 in the second quarter of fiscal 2012. For the quarter, our men's business was approximately 42% of net sales compared to approximately 41% last year, and the average men's price points increased approximately 2%, from $48.35 to $49.25. Women's merchandise sales for the quarter were down just slightly, with strong categories, including casual bottoms, woven tops, active apparel, accessories and footwear. Average denim price points increased from $92.95 in the second quarter of fiscal 2011 to $94.45 in the second quarter of fiscal 2012. For the quarter, our women's business was approximately 58% of net sales compared to approximately 59% last year, and the average women's price points increased approximately 3.5%, from $40.60 to $42.10.

For the quarter, combined accessories sales were up approximately 15%, combined footwear sales were up approximately 7%. These 2 categories accounted for approximately 10% and 6%, respectively, of second quarter net sales, which compares to approximately 9% and 5.5% for each -- for the same period last year. Average accessory price points were up approximately 13.5%, and average footwear price points were up approximately 11%.

For the quarter, denim accounted for approximately 36% of sales and tops accounted for approximately 34%, which compares to approximately 38.5% and 34.5% for each in the second quarter of last year. Our private label business was up as a percentage of net sales for the quarter and represented approximately 30% of sales compared to approximately 28% last year.

During the quarter, we opened 8 new stores and completed 6 substantial remodels. As of the end of the quarter, 318 of our 439 stores were in our newest format. For the full fiscal year, we still anticipate opening 10 new stores, including 1 remaining for September and 1 for holiday, and we also anticipate completing 21 substantial remodels in total and several smaller remodels during the fiscal year. And with that we'll open it up to your questions.

Question-and-Answer Session

Operator

[Operator Instructions] And our first question comes from the line of Paul Alexander, Bank of America.

Paul Alexander - BofA Merrill Lynch, Research Division

Could you give us a sense of how similar you're thinking fall products and trends are going to be to spring? And then, do you think fall will be an opportunity to break from the trends you saw in spring and reaccelerate things with -- in the new products and new brands, or do you think you're going to face the same kind of headwinds you did through spring, or will there be any new dynamics we need to consider?

Dennis H. Nelson

Well, I guess, we don't really make forward statements on that. But we feel good about the product arriving in July, and the response to the new merchandise from our teammates and guests at the end of the second quarter. So we feel good about fall, and look to improve on things.

Paul Alexander - BofA Merrill Lynch, Research Division

Okay. And just one follow-up on inventory. You guys seem to get through that a little better than we expected. Can you talk about how you did that? Did you send any inventory back to vendors?

Dennis H. Nelson

I think our team did -- was constantly reviewing and planning and working. And they're very talented at knowing when to back off on certain things and move forward when we need to. And, I mean, if there was any product sent back, it was very small percent of the total inventory. So it's just a compliment to our teams on managing the inventory.

Operator

Next we'll go to the line of Margaret Whitfield, Sterne Agee.

Margaret B. Whitfield - Sterne Agee & Leach Inc., Research Division

I wondered if you could comment a little more on what's going on with the women's denim business, which has been weak -- weaker than men's in -- for the last several months. Is it a function of warm weather arriving early in quarter 2 or limited colored denim? Or just what do you think is going on there in your women's denim business, and what's the outlook?

Dennis H. Nelson

Margaret, as we mentioned, we're getting good response from the teammates at the end of the quarter on new receipts. I definitely think last year was a very good year for denim, and we were very strong because, probably, of the cooler weather, we usually don't speak in the weather, but it was a plus. And you had kind of the opposite this summer, with the extreme heat. We might have missed a little opportunity on the color. But we think the team did a pretty nice job with it. So we're looking forward to the fall season.

Margaret B. Whitfield - Sterne Agee & Leach Inc., Research Division

I wondered if there's any new promotions that you're planning for quarter 3 to drive traffic, Dennis? And also finally, for Karen, what's the minimum cash that you'd like to have on the books as we head into the back half?

Dennis H. Nelson

Bob, do you want to take the promotion question?

Robert M. Carlberg

On the promotion side, we have -- in the third quarter, we'll have a Fox promotion, that's gotten a little bit bigger on the women's side, and then we'll have our annual October denim promotion, which is always a good kick off for us getting into holiday.

Dennis H. Nelson

Karen?

Karen B. Rhoads

Okay. On the minimum cash, I don't know that I could state specifics there. We'll review that with the board again on September at the board meeting, and provide them at that point in time our cash requirements and cash flow projections, and go from there.

Margaret B. Whitfield - Sterne Agee & Leach Inc., Research Division

What's the date of that meeting, Karen?

Dennis H. Nelson

The -- Monday, what, the 17th or so?

Karen B. Rhoads

Yes.

Dennis H. Nelson

September. I'm sorry.

Karen B. Rhoads

September 17, right.

Operator

Next we'll go to the line of Simeon Siegel, JPMorgan.

Simeon A. Siegel - JP Morgan Chase & Co, Research Division

So I was wondering if you could share how you're thinking about the comp metrics going forward. I know discussions typically come back to the impressive run you've had in increasing price and trying to understand where they go from there. So you spoke about the promotions in terms of the opportunity to drive traffic. I know accessories have been doing well, does that create an opportunity maybe to drive the incremental UPTs? And then just looking at the back half gross margins, so when you are counting for the leaner inventory position that you guys have and AUC benefits you should get, I know you saw merchandise margin declines in the back half of last year, so how do you look at any potential recapture there?

Dennis H. Nelson

Well, as we stated, we don't really make forecast on the future events. We will approach the inventory as we have over the years and make investments where we think there's continued growth, but still kind of manage it in a, what we would consider, a fairly conservative approach. Our stores continue to become stronger with our management and sales team. And I think our merchandisers are doing well. So we're looking, as I mentioned before, we're looking forward to fall. But don't have any other specifics at this time.

Simeon A. Siegel - JP Morgan Chase & Co, Research Division

Okay. And then just a quick follow-up. So I know you mentioned the private label increase this year over last year. Do you guys have a target objective there, I don't remember. And then out of the remaining third-party offerings you have, how much of that product is exclusive to Buckle?

Dennis H. Nelson

So we focus -- we don't set a specific number of what we want private label to be. We evaluate the product with the brands, and we have our plans. But depending how strong the brands look and are performing, cuts into the percent of how -- what our private label is. So private label will continue to grow, it's just a matter of how much the brands will grow. And the -- sorry, what was the other part of the question?

Unknown Executive

Exclusives.

Dennis H. Nelson

Oh, the exclusives of the third party. I would say the majority of our product from the brands is exclusive. I don't know if that would be 80-plus percent. It might vary by season. And sometimes, in season, we'll pick up some of their product that is out of their line if something is performing and we don't have time to either tweak the fit, or the color or styling details.

Simeon A. Siegel - JP Morgan Chase & Co, Research Division

Got it. And then sort of on that first question. So in terms of the accessories, with the strength there, I mean, is there an opportunity -- does that drive the UPTs, or is it a different type of accessory purchase?

Dennis H. Nelson

I mean, they certainly helped the unit per transactions, and we seem to have more excitement and interest in that -- those categories right now. So it should be a plus.

Robert M. Carlberg

Dennis, I'm just going to add to that, the one thing on the UPTs for the accessories with us, they're buying more of the premium product, the Nixon watches, the Diesel watches and Oakley glasses, that was where quite a bit of the increase came. And maybe because of that price point, you didn't see as much of a change in the UPTs, because the accessories have become more expensive.

Operator

Next we'll go to the line of John Kernan with Cowen.

John D. Kernan - Cowen and Company, LLC, Research Division

I wanted to touch back on the colored denim trend that seems to be going on. It seems like you guys are buying into this a little bit more. Where do you see the opportunity on this in the back half of the year within your own assortment?

Dennis H. Nelson

Well some of the brands that we work with have shown a little more of the styling in some color. But -- that looks good to us and looks fresh from what the market is doing. But it will still be, at this point, we still expect it to be a small part of our total inventory mix.

John D. Kernan - Cowen and Company, LLC, Research Division

Okay. And then how do we look at SG&A dollar growth going into the back half of the year? Obviously, there was a little bit of deleverage in Q1, little bit of leverage in Q2, how do we view that SG&A dollar growth relative to sales during the back half of the year?

Thomas B. Heacock

I mean, I think, some of that is hard to say, and it depends on the top line trends, and especially with the selling with so much of that being variable with payroll and incentive compensation that it's really hard for us to say. Obviously, the goal is just have that grow in line with sales, and hopefully, a little bit slower. But without knowing where that top line is that's hard for us to say, I guess, at this point.

Operator

Next we'll go to the line of Travis Williams with Stephens.

Travis Williams - Stephens Inc., Research Division

We call it Stephens. I guess, guys, if you could help us out with the remodels. Maybe if you can remind us sort of the cost of a basic remodel or average cost? And then what typically -- what type of sales lift do you see there, maybe in the first 12 months? That would be my first question, and I've got a couple of follow-ups.

Dennis H. Nelson

Okay. If we do a full store remodel and such, then it would cost, equivalent of a new store, which we're projecting around $700,000 right now. So it will be close to that neighborhood. We have some projects that will vary on our remodels. In smaller markets that the mall and the community doesn't substantiate, that type of investment, we might spend anywhere from $50,000 to $100,000 and really refresh the store and give it a nice environment to shop. And then we'll also do -- we were in a store this week we remodeled where we didn't to the full, full package, but we came very close. There's a couple of things we can take out of the store that keeps -- that the majority would see it as a full remodel but might reduce the expense about 20%.

Travis Williams - Stephens Inc., Research Division

And then the associated sales lift you've typically seen over time?

Dennis H. Nelson

It kind of depends on how mature the store is and how much is dominating the market. But in a lot of cases, it would be in double digits. It also depends a little bit if we expand the space 20% or if we move from a B to an A location, that can have an effect. So there's different variables there. But usually, you'll get a double-digit increase. But it can vary to better than that, as well as lower than that as well.

Travis Williams - Stephens Inc., Research Division

Okay, great. And then, Karen, maybe if you can just comment on the selling expense, declined a little over 2%, I believe, from the quarter. You guys have a pretty variable selling expense line. But I guess it was probably even better than we had anticipated. Is there anything that's in that number that would cause it to be more one-time in nature or -- as far as the reduction there?

Karen B. Rhoads

Oh, again, one of the line items that -- where we would have seen a reduction is the incentive bonus accrual. And the incentive bonus accrual is going to be geared to performance and growth. And so that will vary based on growth and comparable store sales, gross margins and pre-bonus, pretax net income. So for the quarter, that number was less than it was a year ago. Also with our point-of-sale being completely rolled out, we are able to take PIN-based debit in all of our stores, and so we're seeing some savings on the bank card fees by being able to take that PIN-based debit in the stores. And Tom I don't know if there's anything else you would like to add to that?

Thomas B. Heacock

I don't think so, Karen.

Travis Williams - Stephens Inc., Research Division

My last question if you guys don't mind. Inventories look great. I guess if you could just maybe comment whether or not there's any category specifics that's either a little bit heavier or a little bit lighter even as you look into the fall season, that would be helpful. And best of luck guys.

Dennis H. Nelson

Thank you, Travis. I would say, we're real comfortable with our inventory levels right now, and I think the teams have done a nice job of placing our dollars where they're working for us pretty well. And our fashion business, that's ever-changing, and we'll try to keep up with it. But we're looking forward to fall.

Operator

Next we'll go to the line of Edward Yruma with KeyBanc Capital Markets.

Edward J. Yruma - KeyBanc Capital Markets Inc., Research Division

In terms of the incentives comp changes, was there actually an accrual reversal in the quarter, or was it simply that you were accruing less due to the weaker comps?

Karen B. Rhoads

Well it's always, I mean, it's always a year-to-date accrual and adjusting for any prior periods. But the assumptions -- so every month, we project out where we think we'll be out for the year. So for the second quarter, based on like the comparable store sales and some of the other metrics, the overall year-to-date metrics that go into that formula were reduced.

Edward J. Yruma - KeyBanc Capital Markets Inc., Research Division

Got you. And -- I'm sorry?

Karen B. Rhoads

I don't know if that helped, Ed, or that has kind of answer your question there.

Edward J. Yruma - KeyBanc Capital Markets Inc., Research Division

No, no. That certainly does. And in terms of thinking more broadly about the consumer. Obviously, your comps showed a little bit of weakness, and you kind of identified a couple of puts and takes. But have you noticed any demonstrable change in the way the consumers are shopping, that they're more focus on promotional items, and if any regions had been kind of particularly weak?

Dennis H. Nelson

I think on the price point issues, I mean, naturally there's always a certain group of guests that have enjoyed some of our new price points on our gals DayTrip jeans in the mid-$50 to high $50 ranges had a nice response, as well as we were able to reduce some of the men's BKE jeans from the low mid-$70s to the mid-to high $60 range, and that's been received well. So -- but overall, it comes down to if we are a fashion-right and have a good value for our product in most of those cases.

Edward J. Yruma - KeyBanc Capital Markets Inc., Research Division

Got you. I mean, is that a permanent shift in the way the denim buyer is shopping, or there -- you just have a select group that likes that value piece?

Dennis H. Nelson

It's just -- it's almost like an additional group that -- on some of these newer price points that we're attracting, or maybe getting a younger guest that before the prices maybe held them back a little bit.

Operator

Next we'll go to the line of Adrienne Tennant, Janney Capital Markets.

Adrienne Tennant - Janney Montgomery Scott LLC, Research Division

Dennis, I was wondering if you could talk a little bit more about, you had earlier said that you were not necessarily pursuing a lot more color than what we're just currently seeing either in stores or online. I was wondering what the philosophy there. Is it just commoditize at this point? And then secondarily, what are you seeing with regard to over $100 denim trends, either men's, women's, you can speak to however you want, versus the under $100 trends. Are you still seeing a pick up in that premium triple-digit denim category? And then I have 2 follow-ups, please.

Dennis H. Nelson

Okay. As you mentioned, the colored, there's a lot of basic lower-priced out there that does not seem really interesting to us. So we have not seen, at least at this point, we are not seeing a lot of excitement or freshness in that product. And, I guess, as we shop our vendors, that could change, but that's kind of why we are keeping the same level for the most part going forward. And as our denim prices increase in the second quarter on the gals, I think that shows that we've got a nice selection of branded goods that are performing well, and they are liking the selection. The men's price points came down a little bit. As I have mentioned, we were able to bring our men's BKE denim prices a down a little bit with the change of sourcing. And we would feel good about what we're seeing in the branded denim going forward. So we feel good about our selection there.

Adrienne Tennant - Janney Montgomery Scott LLC, Research Division

Okay. And then, just in early August, we've heard some retailers talk about maybe Olympics and then less markdown overall in the mall and then the heat. So I was wondering can you give us any color as to whether any of those things may have played a factor thus far in the quarter? And then from a competitive landscape, we are seeing very, very sharp price points, not for denim that's comparable to yours, I agree, but out of retailers like in Abercrombie, like American Eagle, they don't directly compete against you, but I was wondering any commentary on when the mall goes more promotional, would you react to that going forward? Is there any -- kind of philosophically, would you chase those promotions, or do you want to stay pretty true to your price points?

Dennis H. Nelson

I have no comment on August. And we would, I mean, the malls have been promotional forever, and we have consistently held our strategy and that would be our plan.

Adrienne Tennant - Janney Montgomery Scott LLC, Research Division

Okay, fair enough. And for Karen, can you remind us the incentive bonus accruals. They go into the store level, and I was wondering what level of employees, is it the managers or is it all sales associates that also get that incentive bonus?

Karen B. Rhoads

This incentive bonus accrual that is geared to growth, what I mentioned earlier, the components of the growth in comparable store sales, gross margin and pre-bonus pretax net income, that is for some of our area district managers, as well as the corporate management. Our store managers are -- their incentive is structured differently. Our store managers received a percentage of the net profit of their store. And so theirs is calculated a little bit differently and is earned out [ph]. They have opportunities monthly to earn bonuses based on top line performance. But at the end of the year, at the stores, we're really looking at the net income of each store for them.

Adrienne Tennant - Janney Montgomery Scott LLC, Research Division

Okay. Do sales associates also get commission on their sales as well?

Karen B. Rhoads

They do. The majority of our sales people are on a base plus commission. They also have some opportunity to earn some bonus dollars for being kind of the top salespeople for the period. At the end of the year, there is shrinkage incentive bonus. Our assistant managers would have opportunity for some monthly dollars, based on attaining sales performance targets that are set each month.

Operator

[Operator Instructions] And we'll go to the line of Janine Stichter, Telsey Advisory.

Janine M. Stichter - Telsey Advisory Group LLC

I was just wondering if you could talk a little bit about some of the stores that you've opened in less mature regions, whether it's New Jersey or Pennsylvania, just what you're seeing there? And then as you think about 2013, how we should be modeling new store growth? Do you think it will be similar to the 10 stores you did in 2012?

Dennis H. Nelson

Really in the Eastern area, we have been happy with our growth in several of our stores, and a couple of them are still new, where it's kind of still open of how successful they'll be. And then in 2013, we expect to open 10 new stores. And at this time, will probably be single-digit remodels of some sort. We haven't finalized that. But we've -- really with what we've done the last several years and this year, we've -- we're pretty well caught up on major remodels at this time.

Operator

[Operator Instructions] And speakers, we have no additional questions at this time. Please do continue.

Dennis H. Nelson

Okay, I think we're good then. Thank you.

Operator

And does that conclude your conference call, sir?

Dennis H. Nelson

Yes, sir. Thank you.

Operator

Very good. Ladies and gentlemen, this conference will be available for replay after 11 a.m. today through August 30 at midnight. You may access the AT&T Executive replay system at anytime by dialing 1 (800) 475-6701 and entering the access code of 256390. International participants, please dial (320) 365-3844. That does conclude our conference for today. We thank you for your participation and for using the AT&T Executive Teleconference. You may now disconnect.

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