Duluth Holdings' (DLTH) CEO Stephanie Pugliese on Q4 2015 Results - Earnings Call Transcript

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Duluth Holdings Inc. (NASDAQ:DLTH) Q4 2015 Earnings Conference Call April 7, 2016 4:30 PM ET


Julie MacMedan - IR, Financial Profiles Inc.

Stephanie L. Pugliese - President and CEO

Mark M. DeOrio - CFO


John Morris - BMO Capital Markets

Jon Komp - Robert W. Baird

Dan Wewer - Raymond James

Amy Noblin - William Blair


Good afternoon and welcome to the Duluth Holdings Fourth Quarter 2015 Earnings Conference Call. All participants will be in listen only mode. [Operator Instructions] After today's presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference over to Julie MacMedan, Investor Relations for Duluth Holdings. Please go ahead.

Julie MacMedan

Thank you, Laura, and welcome to today's call to discuss Duluth Trading's fourth quarter and year-end 2015 financial results. Our earnings release which we issued this afternoon is available on our investor relations Web-site at ir.duluthtrading.com, under Press Releases. I'm here today with Stephanie Pugliese, Chief Executive Officer, and Mark DeOrio, Chief Financial Officer. On today's call, management will provide prepared remarks and then we will open the call to your questions.

Before we begin, I would like to remind you that the comments on today's call will include forward-looking statements. Forward-looking statements can be identified by the use of such words as estimate, anticipate, expect, and similar words and phrases. Forward-looking statements by their nature involve estimates, projections, goals, forecasts and assumptions and are subject to risks and uncertainties that could cause actual results or outcomes to differ materially from those expressed in the forward-looking statements.

These forward-looking statements speak only as of the date of this conference call and should not be relied upon as predictions of future events. Duluth Trading expressly disclaims any obligation or undertaking to update or revise any forward-looking statements made today to reflect any change in Duluth Trading's expectations with regard thereto or any other changes in the events, conditions or circumstances on which any such statement is based, except as required by law. Please refer to our SEC filings and our investor relations Web-site for additional information.

And with that, I would like to turn the call over to Stephanie Pugliese, Chief Executive Officer of Duluth Trading. Stephanie?

Stephanie L. Pugliese

Thank you, Julie, and welcome everyone to our fiscal 2015 fourth quarter and year-end conference call. To say the least, 2015 has been a whirlwind year for Duluth Holdings and I am proud to report that our team's high-performance level throughout the year positioned us for both a successful IPO and record financial results this year.

Despite the challenges of the holiday selling season, I am especially pleased to report that our net sales for the fourth quarter increased 27.5% to $140 million, with gross margins increasing 40 basis points to 56.1%. Adjusted EBITDA of $20 million was up 35.3% compared to last year.

Executing on our key initiatives is what drove our success in 2015, and they continue to provide the foundation for our long-term growth and value creation. I would now like to review how we executed against those key initiatives in the fourth quarter. They are, building brand awareness, expanding our retail store presence, growing our men's and women's businesses and investing in our infrastructure to support our rapid growth.

Starting with building brand awareness in our direct segment, we were very pleased with the impact of our advertising and marketing efforts in the fourth quarter. As I mentioned last quarter, we launched some distinctive TV advertising campaigns that we believe were instrumental in accelerating brand awareness to a larger audience.

We focused our advertising spend around our core products such as Fire Hose pants, Flannel Shirts, Longtail T and Buck Naked underwear. These products are long-standing favorites and exemplify our commitment to providing solutions for our customers.

By focusing on these core products and responding to our third quarter advertising test result, we had a more effective and productive allocation of ad spend across TV, print and digital and this resulted in a lower ad ratio year-over-year. Building brand awareness among prospective customers in the critical fourth quarter shopping period was a key objective for us and it was equally important to convert those prospects into new brand stand.

In light of the highly promotional environment during the fourth quarter, we made a conscious effort to carefully manage our promotions in a way that would bring new people into the customer base, protect gross margin and allow us to remain competitive.

For example, we strengthened our promotional activities with more frequent e-mail outreach and offered sequence discounting down to 30% off of an order. However, we purposefully avoided the deep discounting of 60% to 70% off that we saw happening with some other retailers. As we have discussed before, we used free shipping as a promotional tool rather than an upfront guarantee and this additional promotional lever was effective for us in the fourth quarter.

An outstanding and engaging customer experience is incredibly important to us and having appropriate inventory level plays a critical role. In the fourth quarter, our inventory levels allowed us to ship orders complete 98% of the time. We can safely keep this in-stock level because of the evergreen nature of our core products.

One of the key protections built into the Duluth model is the fact that 70% to 75% of our products extend into the next season. We also have very low fashion risk or exposure to extreme cold weather gear, which is critical to managing our inventory levels toward the end of the fall and winter season.

Now moving on to our retail stores, in this fiscal year we opened two new retail stores and one outlet store, bringing our total store count to nine. Our newest store openings in Sioux Falls and our outlet in Oshkosh, Wisconsin did very well over the holiday season, and all stores comped positively for the year, where comparisons can be made. While we don't provide same-store sales, we will begin reporting on the mature units sometime in 2017.

For 2016, we are on target to meet our plan to open four to five stores and we have four leases signed, two in the Chicago suburb, one is in Hoffman Estates which will be our first built-to-suit project, and the other is in Downers Grove. We also signed leases in Omaha, Nebraska, and La Crosse, Wisconsin. We anticipate that all four of these stores will be up and running in the second half of 2016. Looking forward to 2017, we still expect to add seven to eight more stores moving closer to the East Coast to serve our largest customer concentration.

Now I will address our strategy to grow our men's and women's category. Starting with women's, we had a very good year and we are on track with our long-range plan to grow women's at a faster rate than men's in the overall business. We had a strong positive response to the women's advertising we ran in 2015 and we plan to continue to build awareness for women's wear across TV, catalog, digital and retail stores. We continue to test and monitor new advertising campaigns in women's and will do so throughout 2016.

Again, our marketing strategy is to focus on core products in order to build awareness and to accelerate growth of our core product line with different colors, fabrics and size extensions. We are very pleased with the progress of our women's business and anticipate continued margin improvement as volumes increase.

Our men's business, which accounts for about 80% of the sales, also turned in strong performance this quarter. Core products are selling very well and we see additional opportunity in the expansion of transitional products such as rainwear and also in new summer product line.

Similar to our women's category, we are also successfully expanding on men's core products through fabric, size and color extensions. We are encouraged by the absolute dollar growth in the men's category which we believe is being driven by achieving increasing levels of brand awareness. This also bodes well for our women's line in the future as that business moves towards critical mass.

Now I will take a few minutes to review our 2016 initiatives. We are looking forward to another year of strong top line growth in 2016 driven by continued execution on the key initiatives that I just reviewed. We also expect strong adjusted EBITDA growth, albeit at a slightly slower rate than revenues. This reflects additional expenses related to our distribution and software implementation initiative that I will cover now.

We believe that strong logistical systems and support are absolutely critical to running a successful omni-channel enterprise and we have taken a hard look at what we need to run our business more efficiently and better serve our customers. In 2015, we expanded our distribution center capabilities by adding a second third-party logistics partner to support direct sales.

Our 3PL partners are important for two reasons, they help us deliver product to our customers faster and they help us scale and support growth beyond our Belleville location alone. Adding the 3PL partners allowed us to get closer to our West and East Coast customers and reduce shipping times in many cases from three to five days to just one or two days.

While our foremost goal is to do the right thing for our customers, we also need to be efficient in allocating labor costs across our internal and external distribution centers. What we learned in 2015 was that our 3PL labor costs were higher than anticipated, which more than offset freight savings. Some of these expenses were directly related to the labor intensive business of breaking down shipments from our manufacturers and some were related to storing our merchandise at 3PL facilities.

We took a hard look at how to be more efficient in this expense category and as a result made some strategic decisions relative to our Belleville distribution center and our 3PL. To give you some background, our Belleville DC currently ship to customers in the Midwest, handles and processes all returns and is responsible for the prepping and stocking of all of our retail stores. They also break down a portion of our receipts that were not received directly by the 3PL.

We are expanding our Belleville facility this year to accommodate our sales expansion and new store openings and to lower labor intensive 3PL costs. We are also leasing another facility located close by that extends our labor pool further into the Madison, Wisconsin market.

With this expansion in place by the end of 2016, we expect our 3PL partners will focus solely on shipping to our direct customers and that our distribution model will become more cost-effective and efficient as a result of these changes. It is important to note that we are not forecasting near-term margin expansion from distribution efficiencies because over the next few years we will continue to use our 3PL partners to ship more product to our customers on both coasts.

Another key initiative is investing in a scalable technology platform that will support our growth. As previously announced, we plan to implement a new order management system starting in 2016 and expect it to go live in 2017. The new order management system will give us real-time visibility into orders and allow us to direct order shipments from different locations, including retail stores, which will ultimately lead to more productivity in our inventory.

As we experienced in 2015, we expect to incur non-capitalized expenses related to software implementation that will continue to have an impact on SG&A in 2016 and 2017. We believe these investments in distribution and systems infrastructure are critical and will continue to drive efficiencies and enhance customer satisfaction as we grow. We have weighed all of these expenditures very carefully and they reflect our strategy to focus on investments that will grow our business and better serve our customers.

Before I turn the call over to Mark to cover the financial details, I just want to say that we are very excited about the year ahead. Our team turned in a great performance this year despite some challenging headwinds. Our brand strategy and business model proved resilient in a tough environment and will continue to serve us well as we deliver on our 2016 plan.

With that, I will turn the call over to Mark.

Mark M. DeOrio

Thank you, Stephanie. We closed fiscal 2015 on a high note with strong fourth quarter net sales of $140.4 million, up 27.5% compared to $110.1 million in the fourth quarter of last year. Net sales growth was driven by a 24.6% increase in direct net sales and a 57% increase in the retail segment, with growth achieved across the vast majority of product category.

Building brand awareness and acquiring customers is an important growth strategy for us and we are pleased to report that our marketing efforts drove an increase of 28.1% in Web-site visits year-over-year and more sales through our call center. In 2015, our direct business which includes catalog and online sales accounted for 87.6% of total sales.

Opening new retail stores is a key growth strategy for Duluth. During 2015, we opened two new retail stores and one outlet store which helped drive retail sales growth this quarter. Total store sales accounted for a $5.5 million increase in net sales compared to fourth quarter a year ago. We are very pleased with the performance of the new retail location. The average payback on our stores continues to be less than 24 months and we are refining our store opening process with each new location.

Q4 gross profit increased 28.5% to $78.8 million, or 56.1% of net sales, compared to $61.3 million or 55.7% of net sales last year. The $17.5 million increase in gross profit was primarily a result of increased net sales in the fourth quarter. The 40 basis point increase in gross margin rate reflected a strong product mix and improved product costing.

Turning to SG&A, selling, general and administrative expenses increased 26.5% to $59.8 million compared to $47.3 million in the same period a year ago. This included an increase of $5.8 million in advertising and marketing expenses, $4.3 million in selling expenses and $2.4 million in general and administrative expenses.

As a percentage of net sales, advertising and marketing cost decreased 20 basis points to 20.1%, compared to 20.3% in the corresponding prior year period. As a percentage of net sales, selling expense increased 10 basis points to 14% compared to 13.9% in the corresponding prior year period. This was primarily due to an 80 basis point increase in distribution labor and customer service driven by higher 3PL utilization during the peak holiday season. This was partially offset by a 70 basis point decrease in shipping expense as a result of favorable shipping rates coupled with being closer to our customers due to our original 3PL.

The $2.4 million increase in general and administrative expenses was primarily due to an increase in personnel expenses and consulting fees to support the continued growth of our business, coupled with an increase in rent and equipment expense as a result of an increased number of retail stores. As a percentage of net sales, general and administrative expenses decreased 20 basis points to 8.5% from 8.7%, primarily reflecting operating leverage on higher sales.

Adjusted EBITDA was $20.1 million or 14.3% of net sales, compared to $14.9 million or 13.5% of net sales in the prior year period. This represented a 35.3% increase in adjusted EBITDA. We reported GAAP net income of $17.5 million, or $0.58 per diluted share, compared to $13.9 million or $0.58 per diluted share in the prior year period.

Our pro forma net income, which includes an adjustment for income tax expense at an assumed combined federal, state and local effective tax rate of 40%, was $11.3 million or $0.37 per diluted share, compared to $8.3 million or $0.35 per diluted share in the prior year period.

Turning now to the balance sheet and liquidity, we ended the fourth quarter with a cash balance of $37.9 million and working capital of $73.7 million. We had no borrowings on our $40 million revolving line of credit. Inventory increased 33.7% to $55.3 million, compared to $41.4 million in the prior year. While this increase is slightly higher than the increase in net sales, 70% to 75% of our merchandise carries forward to the next season and we feel good about our current inventory level.

Turning now to our financial guidance for 2016, we expect to report net sales in the range of $370 million to $380 million, reflecting a 23.3% growth rate at the midpoint. We expect adjusted EBITDA to be in the range of $40 million to $42.5 million or a 21.3% growth rate at the midpoint. We are forecasting GAAP EPS in the range of $0.66 to $0.70 per diluted share. This assumes a fully diluted share count of 32.2 million shares and a tax rate of 39% and reflects an increase in net income of 26.8% at the midpoint compared to 2015 pro forma net income.

We are reaffirming our long-term growth target of roughly 20% net sales growth, 25% adjusted EBITDA growth and 25% net income growth. As Stephanie mentioned, we plan to open four to five new retail stores in 2016, adding 45,000 to 55,000 additional selling square feet. In addition, we plan to expand our Belleville DC operations and to make significant progress on the design and implementation of a new order management system, which we expect to fully implement in early fiscal 2017.

As a result of these important investments in future growth, we expect to invest in capital expenditures of $24 million to $25 million in fiscal 2016. This includes approximately $10 million for the DC expansion that Stephanie discussed, $10 million to $11 million for new retail store expansion and $4 million for software and infrastructure investment. Our retail store forecast reflects our plans to spend $2 million to $2.6 million in capital expenditures and starting inventory on each new store.

In closing, we delivered strong top line growth and gross margin expansion this quarter. We have a robust outlook for growth in 2016 and we are investing in infrastructure and new retail stores that will support our growth and value creation over the long term.

With that, I will open the call for questions. Operator?

Question-and-Answer Session


[Operator Instructions] Our first question will come from John Morris of BMO Capital.

John Morris

Let me be the first to congratulate you all on a really terrific execution in the fourth quarter, which obviously was a pretty challenging period. Really nice work. It's sort of a Q4 question and into Q1 since we are so well into the first quarter, and obviously you chose just to give kind of annual guidance here, but first of all kind of thinking about how well you navigated through the fourth quarter, Stephanie, to what degree did the weak cold weather product being impacted and have an impact on the gross margin? Clearly it was a little bit better than expected but I'm thinking back to last quarter when you guys did indicate that there were some additional days where you opted to do some things like 20% off total order promotions. Did you have to kind of continue to increase that a little bit? I'm just wondering how much of an impact – could the gross margin have been higher? And then sort of segue that into Q1, were you seeing any of the need to do that thus far in Q1 in terms of respond or deviate from your promotional plan and any kind of color you can give us thus far, since Q1 is so well underway?

Stephanie L. Pugliese

Sure. So I'll try to address that, John, in kind of a couple of sections. First, thinking about the promotional cadence and as it applied to cold weather specific product, we really looked at promotional cadence in fourth quarter and even through into the beginning of first quarter not only as I mentioned a way to stay competitive in a particularly challenging, to reiterate your words, environment in fourth quarter in particular, but more importantly for us in fourth quarter it was about there were a lot of people seeing our ads, there were a lot of people getting our catalogs, a lot of people shopping on Web-sites and in stores, and we wanted to be able to capture that, particularly the prospecting traffic and to convert them into brand stand because we knew that they were shopping in a highly competitive environment and we wanted to make sure that we captured their interest so that we could continue to keep them as customers on the go forward.

As you know, our brand awareness and bringing new customers into the brand is one of the initiatives that we have, is one of our growth strategies and it's what we've been using to build the brand. So that really was the filter through which we put a lot of the promotional decisions in fourth quarter, and even in first quarter.

What I would say about cold weather gear is, certainly we saw that. As an example, our cold weather accessory business was probably one of the softer areas of the business in fourth quarter and early first quarter, but at the end of the day that business is less than 5% of our total, and while that specific area was impacted, it really didn't have a negative impact on the business overall. And again, remember that much of our assortment carries forward season to season. So while we might not have sold quite as much as we anticipated, it's not a perishable margin difficult business for us in the future.

In terms of first quarter, what we've seen and as that applies to just promotional cadence and how we see first quarter coming, first, as you mentioned, we are providing annual guidance and not quarterly guidance that said our first quarter lines up with what we are projecting for our annual guidance. And on the promotional cadence, we are pretty much in line with what we did last year. We have changed up a little bit of the timing of our promotions.

An example of that would be this year we had leap year which obviously we didn't last year. So we kind of took advantage of that to have a moment of a promotion that we could have a little bit of fun with as well. But for the total first quarter, we're in line in terms of global promotion days that we had last year.

The other thing that we have done is we have changed up a little bit the type of promotion that we have done. The stock-up sales this past week is probably a good example of that. And that's really a measure for us to understand the effectiveness of different types of order based promotion so that we can continue to inform ourselves for future quarters, particularly fourth quarter, we have some idea of what things work better or not as well.

John Morris

Great, thank you all very much.


The next question will come from Jonathan Komp of Robert W. Baird.

Jon Komp

If I could ask maybe the first question just related to the marketing outlook for 2016 and if you could give any more color? I know you talked a little bit about some plan to continue to expand the women's marketing effort and I'm just curious at kind of a big picture level what your plans are, a little more detail for the marketing side?

Stephanie L. Pugliese

On women's specifically, Jon?

Jon Komp

On women's and overall, if you could?

Stephanie L. Pugliese

Sure. I would say that the overall point of view around marketing is that we absolutely believe in a multi-pronged omni-channel approach to marketing, and we believe that TV advertising works with digital, works with catalog, works with store, works with Web, et cetera. And so we will absolutely continue to have that mix out there in order to continue to build our brand awareness and to convert new people into the brand and to remind our existing customers that we've got great stuff and to continue to be the amazing loyal customers that they are to us.

On the women's side of the business, there is also an attention that we are paying to some additional testing around women's advertising and types of advertising, and that really has to do with the fact that women's is relatively young in its trajectory relative to men's. So you'll see a little bit more new testing in the women's area than perhaps you might see in men's, but overall what I would say is, the importing thing to note is that it is an omni-channel strategy and that's the strategy that we're going to continue.

Jon Komp

Okay, great. And just as a follow-up, Stephanie, I know you said the first quarter revenue tracking similar to the full-year guidance level in terms of growth. In terms of the marketing calendar for the remainder of the year, are there any shifts year-over-year or anything notable that would maybe cause a meaningful shift in the revenue growth rate or anything worth calling out?

Stephanie L. Pugliese

Not at this point, no.

Jon Komp

Okay, great. And then one more for me just on the retail side, I know on the Web-site the Omaha and the La Crosse locations are listed as 'opening soon' and I think they mentioned 'by the summer' in terms of timing, but I'm just curious in terms of the timing of some of the openings, if you have any more insight, specifically what quarter, kind of any more detail, when some of the openings might fall?

Stephanie L. Pugliese

Sure. We are looking at Omaha and La Crosse in second quarter and the Chicago stores will be in the fall season.

Jon Komp

Okay. And any insights in the potential fifth location? It sounds like you don't have a lease for it yet, but still might be a possibility for the year?

Stephanie L. Pugliese

We are very close on that lease, but at this point we are still in negotiation. More to come on that though.

Jon Komp

Okay, great. Thank you.


Our next question comes from Dan Wewer of Raymond James.

Dan Wewer

First question I wanted to ask was on the timing of the expenses for the distribution center and the software investment, will that be fairly equal as a percent of revenues throughout 2016 or would you expect that to be back-loaded?

Mark M. DeOrio

Dan, I would expect that those expenses will be more back-loaded.

Dan Wewer

Okay. And then second on the forecast of a slightly lower EBITDA rate in 2016, is that all coming from higher expenses or are you expecting gross margin rate to drop a bit in 2016?

Mark M. DeOrio

Dan, that is due to the SG&A expense rate. We are expecting to maintain gross margin rate.

Dan Wewer

Okay. Some of the large retail accounts have been talking about returning excess inventory to their vendors and talking about brands such as Under Armour and Carhartt and North Face, given those are competitors of yours, what do you think those brands are going to do with that inventory and does that pose a promotional risk in this sector perhaps later this year when you get back into the fall and winter season?

Stephanie L. Pugliese

That's a good question, Dan. I think my first reaction to that comment is, that is why I'm very, very happy that we control our own distribution and that we are the only place to go for Duluth Trading merchandise. I think that that element of protection will be again a benefit for us in that our product is unique. Our customers come to us for that unique product.

Now all of that said, we know that last fourth quarter was a tremendously competitive environment, and I think that we, like we do every quarter and particularly every fourth quarter, will be watching what's going on in the competition and we will be monitoring that activity. But that said, I think that what we saw just this past fourth quarter is that we do have resilience, where other retailers that are either selling a lot of different brands or competing against other retailers that have a lot of different brands, they become a little bit less resilient in that environment.

Dan Wewer

Okay. Mark, I had a question on the 3PL cost. You noted that the labor component was 80 bps higher year over year and it was higher than expected. Can you talk about where did the deviation take place, was it more hours that was needed to support 3PL or was it just the cost per area was higher? And then also, I'm having a little bit difficulty I guess understanding how the role of two 3PL facilities changes going forward. Is it going forward they are only involved with the direct channel?

Mark M. DeOrio

Okay, two things, Dan. To your first question, the issue was really not ours. It was the expense rate. I think as we mentioned before, the 3PLs do carry a higher variable expense rate than our own internal operations. And so it was that expense rate that really caused the change in expenses.

In terms of how we are going to change the utilization of the 3PLs, the change is that in the past we had considered utilizing them to do some inventory receiving and bulk breaking and inventory transferring, and what Stephanie described is, going forward we're going to focus them on the outbound shipments to our customers and let the receiving and the break-bulk take place in Belleville which is the lower cost operation.

Stephanie L. Pugliese

And Dan, the one thing that I would add to Mark's comment is, the second piece of 3PL cost that we have incurred is the storage of product. So as the 3PLs were breaking bulk shipments, there was some component of them they were storing, a larger amount than quite frankly they needed to. So the DC expansion in Belleville will also give us more storage capacity to hold those goods.

Dan Wewer

The last question, I promise, do you think that having the larger facility in Belleville and this other facility in the Madison, Milwaukee area, is that going to reduce your needed inventory investment going forward?

Stephanie L. Pugliese

On the shorter term, no, because we still will be holding that inventory in Belleville but then allocating it to the 3PLs closer to need. Ultimately, as we go forward with our order management system implementation as an example, one of the goals we have is to look to increase our inventory turn and the return on that investment.

Dan Wewer

Okay, great. Thank you.


Our next question comes from Amy Noblin of William Blair.

Amy Noblin

Let me add my congratulations on a great year in a tough environment. I wanted to start first, thanks for all the color on the DC and systems investments, sorry if I missed this, but I didn't hear you mention the Web or e-platform. Is that still in the works and wondering if you could talk about that? And then you mentioned you don't expect to leverage distribution near term, but given the added investment, can you talk about your ability to still lever SG&A in total? I know there are some puts and takes there in terms of marketing leverage that you should see. So maybe just comment on SG&A in total. Looks like the guidance assumes a flat rate at least for 2016.

Mark M. DeOrio

In terms of leverage, our expectations, as we discussed before, is we do continue to believe that we will see leverage on the advertising expense spend, primarily as the retail business continues to grow and takes benefit of the investment we make in the advertising, primarily in the direct business. We do continue to expect to see that leverage. Similarly, as the retail business continues to grow, that will have the effect of leveraging the shipping expense, which as you know is a direct business expense.

Stephanie L. Pugliese

And then I'll just jump in, Amy, on your question around the e-commerce platform, the expectation is that this year our order management system will do all of the heavy-lifting there for the implementation next year. E-commerce platform, the beginning of scalping that project and moving forward with that will happen at the kind of tail end of this year, to be implemented after the order management system next year.

Amy Noblin

Okay, thanks. And then just one more question. Stephanie, you talked about kind of using free shipping and tinkering with that as the promotional tool. Can you just let us know where shipping revenue actually ended the year as a percent of sales? I know you expect that to continue to trend down, but I guess how rapidly do you expect that to kind of trend down from these levels?

Stephanie L. Pugliese

Amy, I don't have the exact number on that in front of me. What I can tell you though is that shipping revenue overall, it did decline slightly as a percent of sales, but again it was very similar to what we've been talking about in that we've seen a decline but it hasn't been a cliff kind of falloff of that revenue. So it's pretty similar to our expectations that we have talked about over the past couple of months. I don't have the exact number in front.

Amy Noblin

Okay, thanks so much.

Stephanie L. Pugliese

Thank you everybody for joining us today for our call. We look forward to talking with you all again in June for our first quarter earnings report.


The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.

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