Dick's Sporting Goods, Inc. (DKS) CEO Ed Stack on Q4 2018 Results - Earnings Call Transcript

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About: Dick's Sporting Goods, Inc. (DKS)
by: SA Transcripts
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Earning Call Audio

Dick's Sporting Goods, Inc. (NYSE:DKS) Q4 2018 Earnings Conference Call March 12, 2019 10:00 AM ET

Company Participants

Nate Gilch - Director of Investor Relations

Ed Stack - Chairman & Chief Executive Officer

Lauren Hobart – President

Lee Belitsky - Chief Financial Officer

Conference Call Participants

Michael Lasser - UBS

Simeon Gutman - Morgan Stanley

Christopher Horvers - JPMorgan

David Schick - Consumer Edge Research

Mike Baker - Deutsche Bank

Seth Sigman - Credit Suisse

Steve Forbes - Guggenheim Securities

Camilo Lyon - Canaccord Genuity

Sam Poser - Susquehanna

Peter Benedict - Robert W. Baird

Joe Feldman - Telsey Advisory

Omar Saad - Evercore ISI

Scot Ciccarelli - RBC Capital Markets

Peter McGoldrick - Stifel

Tom Nikic - Wells Fargo

John Kernan - Cowen

Chris Svezia - Wedbush

Operator

Good morning, ladies and gentlemen, and welcome to the Dick's Sporting Goods Fourth Quarter 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.

At this time, I would like to turn the conference over to Nate Gilch, Director of Investor Relations. Please go ahead, sir.

Nate Gilch

Good morning, everyone, and thank you for joining us to discuss our fourth quarter 2018 results. On today's call will be Ed Stack, our Chairman and Chief Executive Officer; Lauren Hobart, our President; and Lee Belitsky, our Chief Financial Officer. A playback of today's call will be archived on our Investor Relations website located at investors.dicks.com for approximately 12 months.

As a reminder, we'll be making forward-looking statements, which are subject to various risks and uncertainties that could cause our actual results to differ materially from these statements. Any such statements should be considered in conjunction with cautionary statements in our earnings release and risk factor discussions in our filings with the SEC, including our last annual report on Form 10-K and cautionary statements made during this call.

We assume no obligation to update any of these forward-looking statements or information. Please refer to our Investor Relations website to find a reconciliation of any non-GAAP financial measures referenced in today's call.

And finally, for a couple of admin items. First, we have added a short presentation to our Investor Relations website to help visually depict several of the strategies we'll discuss in today's call. Second, a reminder as it relates to quarterly dividend announcements, we will be announcing future quarterly dividends in conjunction with our quarterly and year-end earnings releases. And lastly, for your future scheduling purposes, we are tentatively planning to publish our first quarter 2019 earnings release before the market opens on May 29, 2019, with our earnings call at 10:00 AM Eastern time.

With that, I will now turn the call over to Ed.

Ed Stack

Thanks, Nate, and welcome back to the IR team. I'd like to thank all of you for joining us today. As we announced this morning, we're very pleased to deliver full year earnings per diluted share of $3.24. This was near the high end of our guided range of $3.15 and $3.25 and represents an 8% increase over last year, which included $0.09 for the 53rd week.

For the fourth quarter on a 13-to-13-week basis and adjusted for the calendar shift, our consolidated same-store sales declined 2.2%, in line with our expectations. Our eCommerce business remained strong and increased 17% over last year.

As a percent of total net sales, our online business increased to 23% compared to 19% in the same period last year. We're very pleased with the performance of our core business during the quarter. Our athletes have responded positively to many of our initiatives across merchandising, eCommerce and marketing and drove comp gains across key categories including apparel, athletic footwear, outdoor equipment, fitness and our private brands.

As expected, our prior actions in hunt and electronics offset these gains. Taken together, these two categories negatively impacted our fourth quarter comps by 3%. As we enter 2019, we're enthusiastic about our business. We're excited about the strategies we're pursuing, encouraged by our athletes' early response to them and confident in our ability to convert this momentum into positive comp sales beginning in the second quarter.

While we're pleased with the results achieved so far, we know that we need to continue to reinvest in our business to meet the changing needs of our athletes and increase their engagement with us. With this in mind, we are focused on three categories of investment in 2019: enhancing the athlete experience in our stores; improving our eCommerce fulfillment capabilities; and implementing technology solutions to improve the athlete experience and our teammates' productivity.

Enhancing the athlete experience in our stores is critical for our long-term growth, as our stores generate approximately 80% of our total revenue. We therefore need to ensure that they meet the demands of all athletes from the beginner to the enthusiast.

That said, we will be continued to optimize our assortment, reallocate floor space to regionally relevant and growing categories and make our stores more experiential. We tested several initiatives last year and have been pleased with the early response from our athletes.

Late in the third quarter, we removed hunt -- we removed the hunt category from 10 Dick's stores where it underperformed and replaced it with a more compelling assortment. These 10 stores generated positive comp sales and had a strong margin-rate improvement during the fourth quarter.

Following this success, we will remove hunt from approximately 125 additional Dick's stores in 2019 where the category underperforms. It will be replaced with merchandise categories that can drive growth, each based on the needs of that particular market.

We also tested both merchandise presentations last year which we call strike points. These strike points provide our athletes with a clear point of view of what's important and showcase key items in a very impactful way. We've been very pleased with how our athletes have responded in our test stores.

And beginning late in the first quarter, we will deliver a much more dominant presentation as we expand our strike points across the chain. Key merchandise categories will benefit from this improved presentation along with a strong product pipeline from several of our key strategic vendors, as well as our private brands.

Our relationships with our brands have never been stronger and our access to differentiated and premium product continues to improve. To make our stores more experiential we tested the addition of HitTrax technology in batting cages in several stores.

This fun and interactive experience allows our baseball and softball athletes to determine the best bat for them by testing and measuring their launch angle, exit velocity and distance. The strong engagement and response from our athletes led us to expand this test, which is now in 150 stores across the country.

We believe our HitTrax experience and expended and more compelling product assortment and improving the integration of our GameChanger app will make us the destination for baseball athletes from the recreational to the enthusiast player.

Lastly, our private brands will continue to be an integral part of this strategy to drive differentiation and exclusivity in our assortment. During 2018, our private brands remained strong, growing double digits. As a percent of total net sales, our private brand sales increased to approximately 14% compared to 12% last year. In 2019, we expect to continue to strengthen as our private brands will play an important role in our space allocation and assortment strategies.

We will expand CALIA's footprint in approximately 80 stores. Launch a new athletic apparel brand in time for back-to-school that will replace Reebok and enhance the quality of our existing offerings with a focus on product innovation. To support this strategy, we will continue to invest in our products development team to help us reach out $2 billion sales goal in private brands.

In closing, 2019 is an important year in which we are making critical investments to fuel long-term growth and further solidify our leadership position. I'd like to thank all of our teammates for their hard work and commitment this past year and for their upcoming efforts in 2019.

I would like – now like to turn the call over to Lauren.

Lauren Hobart

Thank you, Ed and good morning everyone. As we enter 2019, we remain focused on building the best omni-channel experience in sporting goods. As Ed outlined, we are increasing our investments in the store experience eCommerce fulfillment and technology.

This morning, I'll provide some additional details on these initiatives. In addition, I will discuss how we are leveraging the power of our expert opinion to guide athletes, and we'll provide an update on our productivity efforts.

Our teammates are critical to bringing our improved store experience to life. One of our key investments therefore is in our stores, where we will deliver more robust training and education. For example in partnership with key brand partners, we're launching a new multi-day footwear training summit to elevate our teammate's product expertise and selling skills. This focus - the focus on training will enhance our service model and it will also support new and differentiated experiences for athletes such as HitTrax.

Turning to eCommerce, during 2018 we were pleased to deliver 17% growth in our eCommerce business. We provided our athletes with an improved online shopping experience this holiday season through an enhanced assortment and better functionality. We also work closely in partnership with industry leaders Google and Facebook to dial up our digital marketing and drive increased traffic.

Looking ahead, we believe a big opportunity to continue improving our online experiences to faster and more reliable delivery. To achieve this, we're investing significantly in our fulfillment capabilities. As I mentioned last quarter, we're building two new dedicated eCommerce fulfillment centers in New York and California. These new facilities will open during the third quarter and will enable us to deliver the majority of our online orders within two business days in the near future.

The state-of-the-art facility in New York will be highly efficient as we invest in robotics to drive automation and optimize our cost per shipment. We will also continue to improve the functionality and performance of our website. This will include a faster and more convenient checkout, improved page responsiveness and exciting new content through our Pro Tips platform. In addition, later this year, we will re-platform our mobile and tablet sites. This will allow us to control our own mobile destiny and deliver quality features to our athletes faster.

Our technology investments extend beyond just improving our website. We will continue to increase our investments in technology, talent and capabilities to make the shopping experience easier and more convenient for all athletes regardless of when, where, or how they shop with us. We'll also aim to leverage technology to improve the productivity of our teammates.

For example, we recently delivered an application, which we've named merch search, to all DICK'S stores nationwide. This app provides real-time product information including detailed product descriptions, inventory availability, and alternative product recommendations so that our teammates can guide athletes through their shopping experience.

Additionally, we will continue to leverage the power of our expert opinion to guide and inform our athletes throughout their entire sports journey. As Ed mentioned, our strike point presentations are making it easy for athletes to see and react to the products that we strongly believe in.

Our new integrated marketing campaign Better Starts Here will inspire our athletes and invite them to DICK'S to explore our newly expanded enthusiast level assortments. And we continue to expand our ability to leverage our vast ScoreCard and Team Sports HQ datasets to drive traffic through timely and targeted messaging. Finally, we remain focused on increasing our productivity as we lower costs and eliminate unnecessary spending across all areas of our business.

During 2018, we eliminated approximately $30 million of expense and identified a pipeline of additional savings of similar magnitude for 2019. We plan to reinvest these savings to help offset the strategic growth investments that we outlined this morning. Both the investments and the savings have been incorporated into our 2019 earnings guidance, which we will cover in greater detail.

In closing, this is a very exciting time for our company as we execute against our strategic priorities. We see tremendous opportunity as we continue to transform our business to meet our athletes ever changing needs.

I will now turn the call over to Lee to review our financial results and 2019 outlook.

Lee Belitsky

Thank you, Lauren, and good morning everyone. I'd like to start with a brief review of our fourth quarter results. On a 13-to-13-week basis and adjusted for the calendar shift consolidated same-store sales decreased 2.2%, with a 17% increase in our eCommerce business. Consolidated sales decreased 2.6% to approximately $2.49 billion. This also reflects the impact of the calendar shift, which negatively impacted sales by $39 million.

Transactions decreased 3.1%, while average ticket increased 0.9%. On a 13 week to 14 week basis consolidated sales decreased 6.5% or $172 million, which was negatively impacted by sales of $105 million from the extra week last year and the previously mentioned calendar shift of $39 million.

During the quarter, our best performing categories included apparel, athletic footwear, outdoor equipment fitness and our private brands. Apparel and athletic footwear each delivered low-single-digit comp increases. The strength in athletic footwear is driven by key brands and represented an improvement compared to the prior quarter. Additionally, we were pleased with the performance of outdoor equipment and fitness each posting strong comp increases. The strength in outdoor equipment was driven by improved in-stocks and strike points across strategic vendors.

Our private brands also continued to comp positively with higher penetration. We continue to see double-digit declines in hunt and electronics, which together impacted the comp sales by 3% for the quarter. Excluding these impacts, our consolidated same-store sales increased 0.8%. Team sports also declined driven by used baseball bats as we begin to anniversary last years bat regulation change.

Gross profit in the fourth quarter was $694.6 million or 27.87% of net sales, a 168 basis points decline versus last year on a non-GAAP basis. The decline in gross margin was driven by higher shipping, fulfillment and freight costs as a result of our strong eCommerce growth and by occupancy deleverage.

Merchandise margin decreased by 37 basis points. The decline is attributable to expense recognition for changes in our ScoreCard program and revenue recognition and reporting changes for gift card breakage. Our merchandise margin rate otherwise was flat for the quarter.

SG&A expenses were $552.2 million, a $38 million decrease from last year on a non-GAAP basis, which included $26.5 million in expense savings from the extra week. Excluding the extra week last year, SG&A expenses decreased $11.5 million. During the quarter, the expense reductions that Lauren referenced more than offset strategic investments and higher incentive compensation. As a percent of net sales, SG&A was flat compared to last year at 22.16%.

In total, we delivered fourth quarter earnings per diluted share of $1.07, which was negatively impacted by approximately $0.08, due to the shifted calendar. This compared to the GAAP earnings per diluted share of $1.11 and non-GAAP earnings per diluted share of $1.22 last year, which were positively affected by $0.09 for the 14th week last year.

For the full year, we delivered earnings per diluted share of $3.24. This compares to $3.01 last year which was positively impacted by $0.09 for the 53rd week. On a 52-to-52-week basis and adjusted for the calendar shift, consolidated same-store sales decreased 3.1% with the headwinds from hunt and electronics categories negatively impacting comps by 2.3%.

We delivered a 17% increase in our eCommerce business and during 2018 we opened 19 DICK'S stores and closed six.

Now looking to our balance sheet, we ended the fourth quarter with approximately $114 million of cash and cash equivalent and no borrowings on our revolving credit facility.

Additionally, our inventory levels increased by 6.6% in the quarter as we made strategic investments in support of key growth categories. Our inventory going into the first quarter is clean and we are confident of our inventory position as we enter the spring season.

Turning to our fourth quarter capital allocation, net capital expenses were $58.6 million. We repurchased 957000 shares of stock for $33.7 million at an average price of $35.23.

In total for 2018, we repurchased 9.6 million shares for $323 million and have approximately $433 million remaining under our authorization. We also paid approximately $21 million in dividends during the quarter. And a few weeks ago, we announced an increase in our quarterly dividend of 22% to $27.50 per share.

Now, turning to our outlook, for 2019, we anticipate earnings per diluted share to be in the range of $3.15 to $3.35 and consolidated same-store sales to be approximately flat to up 2% for the year.

We expect to deliver positive comps beginning in the second quarter by the execution of our strategies as well as the hunt and electronics headwinds we faced last year meaningfully abating.

Specific to hunt, we anniversaried our firearms announcement at the end of February. With the exception of the month of February most stores where we will reallocate space to grow in categories we now expect our hunt business to generally follow industry trends.

With respect to electronics, we anniversaried our exit from this business at the end of the fourth quarter. As Ed and Lauren discussed, within our guidance we have included strategic investments that we believe will benefit our business in 2019 and over the long-term. These investments will have an approximate $60 million on EBT in 2019, it includes $35 million to enhance the athlete experience in our stores, $15 million to improve our eCommerce fulfillment capabilities, and $10 million in technology.

The enhancements to our store experience include our space reallocation efforts, rollout of our HitTrax technology and batting cages, expansion of our strike point presentations, and investment in our product development teams.

Improvement in our eCommerce fulfillment capabilities include the operating expenses associated with our two new dedicated fulfillment centers in New York and California.

And lastly, our technology investment is concentrated around elevating our talent and capabilities which will better position us to deliver solutions that improve the athlete experience and our teammates' productivity. While making these investments, we also remain focused on improving our productivity and eliminating unnecessary spending.

For 2019, we have identified additional productivity opportunities through which we expect to eliminate about $30 million of expenses which has also been contemplated within our guidance and will fund about half of our strategic investments. All of this considered, operating margin is expected to decline by 20 to 40 basis points year-over-year as we make strategic investments in our business.

Gross margin rate is expected to be approximately flat to down slightly, driven by anticipated double-digit sales growth in the eCommerce which has lower gross margin rate and from the investments we are making to improve our fulfillment capabilities.

SG&A is expected to deleverage as a result of our strategic investments. Additionally, our guidance contemplates an opportunity for modest merchandise rate expansion, the previously discussed productivity savings of approximately $30 million, and meaningful inflationary headwinds from increasing hourly wages and higher freight costs.

Our earnings guidance assumes an effective tax rate of 26% and is based on an estimated 95 million diluted shares outstanding. This includes the expectation of share repurchases to fully offset dilution in 2019.

In 2019, net capital expenditures are expected to be approximately $200 million which will be concentrated in improvements within our existing stores technology and eCommerce fulfillment and also includes seven new DICK'S stores and two new Golf Galaxy stores. In 2018, net capital expenditures were $170 million.

Before concluding, I will take just a moment to provide an update on the new lease accounting standard. During the first quarter, we will adopt a new lease accounting standard using the optional transition method which allows for a prospective application of the standard. We estimate the adoption will result in recognition of additional net lease assets and lease liabilities of approximately $2.3 billion respectively. We do not believe the new standard will materially affect our P&L.

This concludes our prepared comments. Thank you for your interest in DICK'S Sporting Goods. Operator, you may now open the line for questions.

Question-and-Answer Session

Operator

Thank you sir. Ladies and gentlemen, we will now begin the question-and-answer session. [Operator Instructions] And your first question will be from Michael Lasser of UBS. Please go ahead.

Michael Lasser

Good morning. Thanks a lot for taking my question. Can you give us more details on the gross margin outlook for the upcoming year especially in light of how it performed in the fourth quarter? It seems like you're expecting a considerable step-function change in the impact from eCommerce fulfillment cost to what degree will this come from the new facilities coming online? And to what degree is it from other factors?

Lee Belitsky

So, with regard to gross margin the fourth quarter I don't think is a good indicator in looking at the year-over-year because we have 13 weeks against 14 weeks, we have a shifted calendar, and we have our highest period of penetration for eCommerce sales in the fourth quarter compared to the rest of the year.

So, the fourth quarter would have a disproportionate drag on the gross margin rate. So, we would expect gross margin impact to be significantly lower as we look out over the full year for next year than it would've been in the fourth quarter of this year.

Michael Lasser

So are you -- is -- how does the push and pull relate -- unfold compared to fulfilling from your stores versus the new eCommerce fulfillment centers? Is that a big part of the story?

Lee Belitsky

For the fourth quarter of this year, there are startup costs involved with it. We think that over the intermediate to long-term, the cost of fulfilling orders out of our distribution center, if you look at their cost of fulfillment plus the cost of shipping is slightly favorable for us versus fulfilling from our stores. And we think we've got a better quality and better predictability in that, but we do have two facilities we're starting up at once in the back half of the year. So there are some startup costs that we have embedded within the forecast for 2019. Yes, 2019.

Michael Lasser

And then my follow-up question is where is the $30 million of savings coming from? How do you ensure that this doesn't impact the customer experience and potentially jeopardize sales? Thank you so much.

Lee Belitsky

A couple of big pieces. We have -- a big part of the savings are in supply chain. We've kind of rework some of our benefits programs a bit. And we have some significant savings from the out of rent as well. So those are three chunks none on which will really impact the customer experience.

Michael Lasser

Good luck with the year.

Lee Belitsky

Thanks you.

Ed Stack

Thank you.

Operator

The next question will be from Simeon Gutman of Morgan Stanley. Please go ahead.

Simeon Gutman

Thanks. Good morning everyone. My first question is on operating margin. I want to clarify that even excluding the investments, if we take them out is operating margin at the midpoint is still expected to be down? If that's correct, can you -- can we talk about the drivers ex the investments of it if that's the case?

Lee Belitsky

Operating margin including the $30 million of investments, the operating margin would -- I think would be up slightly on that pretax margin at the midpoint. So that's really what's driving the decline. It's relatively level to top a little bit excluding the -- including the $30 million. And the second half of your question?

Simeon Gutman

I'll ask a follow-up then. I -- we've talked about the underlying run rate of the business ex some of the hunt electronics. And then in the past, we've talked about one of the brands, so can we talk about the -- I guess the underlying health of the business excluding those impacts? Because if you were to, seems to capture I think a consistent picture of what we were reporting last year of where the business should end out. But does the zero to two reflect some of the productivity improvements that you should see from a sales perspective given some more efficient inventory product cycles et cetera?

Ed Stack

Yes, so we're really confident about the business. We expect to get to flat to 2% at the end of the year -- beginning in the second quarter and for the year. And the categories that we think that'll come from are what you would expect that we've been talking about. So the apparel category and what we're doing with our strike point merchandising, what we've done from a footwear standpoint in access to different products. The Team Sports area once we get past the bad change last year, which was very significant for every little league headed by a new -- or virtually every league headed by new bat last year they don't have to do that this year. So we are really very, very confident and excited about our business.

Simeon Gutman

Okay. And if I can just follow-up would you say that the -- like how would you describe the underlying momentum in the fourth quarter relative to the third? Is it about the same? Is it getting better? Some of the internal metrics that you've looked at?

Ed Stack

A bit better.

Simeon Gutman

Okay, great. Thanks.

Ed Stack

Sure.

Operator

The next question will be from Christopher Horvers of JPMorgan. Please go ahead.

Christopher Horvers

Good morning. Can you talk about traffic and ticket a little bit. Ticket has been up very nicely in the past couple of quarters. Would have been up more if it weren't for the hunt and electronic headwind would think that the hunt side in particular is a bigger ticket and -- so what's -- is that right? And what's driving the ticket up? Is it sort of AUR recapture from what was a very promotional period in the back half of 2017? And how are you thinking about the ability to continue to drive ticket and traffic in your outlook for 2019?

Ed Stack

Well I think there were a couple of things that drove the ticket. So the AURs were up. It was less promotional than it was last year. We had a very good winter from a cold-weather standpoint. So our -- the apparel piece was very good. The hunt piece is still a -- kind of help you sell a lot of ammunition. You sell guns, but a lot of ammunition that is lower price. But the underlying health of the business and what we see happening we are pretty excited about. And we think that that -- we think that the ticket will continue to be positive.

Christopher Horvers

Understood. And Lee, you talked about the detail around the margin's outlook for the year. And I understand that we have to get past that bats and the Eagles here in the first quarter, but any other cadence commentary around comp or gross margin and SG&A particularly as we have these DC openings? Does that sort of frontload some expense into the first three quarters for the first and the fourth quarter and so forth?

Lee Belitsky

Yeah. It is a little bit of extra -- there's a little bit -- not a huge amount, but a little bit of extra expense in the second quarter related to a lot of floor reconfigurations, as we're looking to expand some of the departments that are really growing for us, reallocate some of the floor space there. And remove hunt from those stores as well, so we have some extra cost in the second quarter related to that. Other than that the -- some of the margin headwinds will be -- gross margin headwinds will be in the third and fourth quarter as we bring up our two new facilities there.

Christopher Horvers

And the floor reset that's an SG&A item?

Lee Belitsky

Yeah. That is principally an SG&A item, yes.

Christopher Horvers

Got it. Thanks. Have a great year.

Lee Belitsky

Thanks.

Ed Stack

Thank you.

Operator

The next question will be from David Schick of Consumer Edge Research. Please go ahead.

David Schick

Hi. Thanks for taking my question. My first question Ed, can I quote you to my kids that they don't need new bats this year?

Ed Stack

No. Please don't do that. They probably don't need to know.

David Schick

Yes. No, it would just be at dinner tonight letting them know the bad news. Okay, so my first -- hopefully that doesn't count. My first question would be as we think about the longer-term model, is this a new level of investment those impacts you're talking about? Or is it -- is there a discrete line of sight that they fall back as we get past calendar 2019?

Lee Belitsky

The majority of these cost are going to carry forward into the following year.

David Schick

Okay. Great. Thank you. And then within eCommerce, so understanding eCommerce mixing in drives your gross margin lower. But if I just compared eCommerce gross margin to eCommerce gross margin on the rate basis, is the margin within eCommerce getting better or worst and moving substantially one way or the other?

Lee Belitsky

I mean are you talking about operating margin?

David Schick

How you think about it. I'm talking about gross margin is the -- yes.

Lee Belitsky

I don't think we want to get into that level of granularity on the P&L individually for it. We've had significant improvements in the profitability of our eCommerce business and it's nicely profitable for us, we're pleased with that trajectory but we haven't like broken down the individual components.

David Schick

Okay, that’s fair. Thanks very much.

Operator

The next question will be from Mike Baker of Deutsche Bank. Please go ahead.

Mike Baker

Hi, thanks. I'll just follow-up on Dave's question. So the costs are ongoing, but do they increase I guess in 2020? Or is that same run rate such that if you were able to comp positively beyond this year you would leverage those costs?

Lee Belitsky

Well, we haven't worked out our detailed plans yet for 2020, but the investments that we're making this year, we wouldn't expect those to be increasing in the following year. Now we may do some other new things that we haven't gotten to yet, but we haven't got into guiding for 2020.

Ed Stack

But we wouldn't expect those to increase going into next year meaningfully.

Lee Belitsky

No.

Mike Baker

Understood. Okay. Thank you. And then you -- someone also followed-up, someone had mentioned in the past you've talked about three impacts to your business this year being -- that the hunt being the electronics and also one of your brands hurting you. You haven't mentioned that this quarter. But how much of that -- how much did that drag your -- the 3.1% comp for the year? In other words you quantified 20 to 30 basis points of the remaining 80 or so, how much was from Under Armour?

Lee Belitsky

So we're 80 basis points positive excluding hunt and electronics. So again Under Armour continues to be difficult, but we have mentioned now for the second quarter in a row that our apparel business is a positive. So we've been able to replace the loss Under Armour apparel business with other brands in the stores at this point. And to the extent we can get that Under Armour business into a better position going forward it would bode better for the business as well.

Ed Stack

Yes. As I indicated in the last call, we're much more enthusiastic about the Under Armour business going forward. We've made some changes to the assortment. Under Armour's been very helpful with that and we see a very different trajectory from Under Armour going forward.

Mike Baker

Understood. Last one if I could. The comping down of the first quarter, how much of that is due to not yet fully cycling? The product line issue? How much is through the bat issue? And then presumably the spring season had to start off great because the weather hasn't been cooperative for a lot of seasonal businesses. How much is that impacting?

Ed Stack

Yeah, so let me -- that's the impact of -- we're -- I'm not going to qualify each one of those as to what percent of that is, but those are the three main things that are impacting the business in the quarter. We've got -- we haven't fully anniversaried the gun issue, we have -- there's a number of other retailers that said it's been a bit of a slower start, but we're pretty positive going forward.

Mike Baker

Okay, understood. Really appreciate it. Thank you.

Operator

The next question will be from Seth Sigman of Credit Suisse. Please go ahead.

Seth Sigman

Hey, guys, good morning. Thanks for taking the question. My question is really around inventory growth. Can you talk a little bit more about the growth that we're seeing? Seems to be the fastest growth we've seen in some time. And maybe just any view on the situation across the competitive landscape? Just trying to better understand the risk of more promotional activity here. Obviously coming into 2018 sector seemed to be pretty lean with inventory, seems to now be picking up. So just curious how you guys are thinking about that?

Ed Stack

Yeah, you’ll see our inventory growth this quarter, next quarter and through the year. And as we've taken a look at this, we think one of the issues we've had is we probably lean -- have the inventory running a bit too lean. So we're investing back in inventory.

What we're doing though is we're investing in inventory in what we characterize as non-toxic inventory. Inventory that -- our basic products whether it be the Nike Legend T, certain Nike running shorts, Adidas' key running shoes, training shoes of product that is really a go-forward product that is not toxic, it doesn't have a short shelf life. And that's what we've done with these strike points and they've been extremely successful.

I can't stress enough also the change we made in the 10 stores in the fourth quarter and that they comped positive. So we reset these 10 stores. We're going to do this with 120-some stores this year it'd be completed at the beginning of the third quarter. And these changes that we're making is growing that inventory. Again it's non-toxic inventory. It's go-forward inventory. And we don't expect that to -- it's not a product that we expect that we'll need to be promotional around.

Seth Sigman

Okay. And then specifically on the removal of those hunting categories in the 120 stores you're talking about here, so the net impact from that should actually be positive I assume as you replace hunting with more productive categories? Is that right, and is that included in the guidance?

Ed Stack

That's what we expect to be, but understand we won't have this project completed until the beginning of the third quarter.

Seth Sigman

Got it, okay. And then just my final follow-up is on the investments you talked about and potentially continuing into next year. How do we think about the long-term EBIT margins or EBIT dollar growth outlook? At what point do you feel like you can get to a point were you could actually start to grow EBIT dollars again?

Lee Belitsky

We really -- at this point we haven't guided beyond this year. We continue to work through what level of investment we need to make in the business going forward, but we're getting increasingly confident about our ability to drive comp sales. So we're not going to be got guiding beyond this year at this point.

Seth Sigman

Okay, got it. Thanks and good luck.

Lee Belitsky

Thank you.

Ed Stack

Thank you.

Operator

The next question will be from Steve Forbes of Guggenheim Securities. Please go ahead.

Steve Forbes

Good morning. I wanted to focus on those 10 stores, right? You mention positive comps, but can you expand on the learnings around customer engagement right in, sort of, the pace of the change that transpired within the stores. Really just any color would be helpful for us to understand how impactful this could be?

Ed Stack

Well, don't get ahead of yourself. We're really excited about this and the comps were positive. And the thing that we were even -- so the comps were positive, the margin rates were better because of the mix. So if you get positive comps and an increase in margin as we all know that's a very good thing and the thing we were very excited about is traffic in those stores was actually up.

Steve Forbes

And then just a quick follow-up on that as well. As you think about the 125 stores poised to receive that refresh as you will call it, does this capture all the underperforming stores in the base as it relates to hunt? Or do you view this as a multi-year initiative?

Ed Stack

We look at this as a multi-year initiative. We -- the 10 stores we're very pleased with. We're expanding it to 120 some stores and we'll see how that goes. And if it goes as well as expected, we would probably take another batch of stores next year. This is around having productive space. And there is some places that the hunt business is very good, other places that it's not very good. And we're just allocating floor space to make our boxes more productive. And the 10 stores we're pretty enthusiastic about the response we have there.

Steve Forbes

And just the last one and I apologize for the quick one here. Just the -- was there any difference within the 10 stores, you think about the six stores that had a batting cage versus the four that didn't have a batting cage or an attraction? What's the sort of the outlook for the 125, did they receivable both of those experiences?

Ed Stack

Well, not all of them do. So some do, some don't. And it's really too early to kind of say what the differences between those that had the hunt -- that had that in the batting cages and we did the batting cages in six stores. So some of the 125 have the batting cages, some of them don't.

Steve Forbes

Thank you, Ed.

Ed Stack

Sure. Thank you.

Operator

The next question will be from Camilo Lyon of Canaccord Genuity. Please go ahead.

Camilo Lyon

Hi. Thank you. Good morning. I was hopeful -- hopefully, you can give us a little bit more detail on the incremental comp opportunities. You talked about the initiatives that you're doing, you talked about the experiential components and how you're reformatting the stores, but I'm curious to know what's the key drivers that gets you from a zero comp to a 2% comp? So what are the rank order opportunities that can get you from flat to up 2%?

Ed Stack

Well, I think there is a number of things. It's kind of how the -- how we're pretty enthusiastic about the baseball business, where we've got a big headwind there with the bats that will subside a bat going into the second quarter. As we take a look at the full year, if we have another weather year like we had this past time -- this past year that would be helpful.

And one of the things that we think will be very important is being in-stock. So these key non-toxic go-forward products that are in-stocks were not nearly as robust as we would like them to be as we scaled our inventory back a bit too far. And having these in-stocks is going to be a big part of it.

Camilo Lyon

Okay. That's very helpful. Thank you. My next question is going back to the athletic apparel category. You talked about the re-launch of your private label athletic apparel brand. Can you shed some color on the components of that? What will that look like? And maybe shed some light relative to what Second Skin was? I think you probably had some learnings around pricing. So I'm curious to know how are you price this product? How it's going to be setup in the stores?

And then how does this all fit within the context of a comment you just made on Under Armour? And seeing the improving there do we -- should be expect to see a reallocation of square footage go back to the Under Armour brand that had been taken away last year? Or will the square footage be more allocated to the new brand that you're going to be launching before back-to-school?

Ed Stack

Well, the new brand is very different than Second Skin. So Second Skin, we still have we're working through what we're going to do with Second Skin, but the brand that we're going to have is more of a -- of an opening price point product -- opening price point for us. Very good quality, terrific value, the research we've done on this has been very well received, and we're pretty excited about it. It will have meaningful floor space.

So when you walk in you will know that we're in this business and it will primarily we had a licensing agreement with the Reebok brand and it will take the place of Reebok. And we think that it will do more business there with than we did with Reebok. It will be across mens', womens', boys', and girls' product. So we're very excited about that. And like I say the initial research has been really very positive.

As far as UA goes, we're enthusiastic about our Under Armour business going forward. But it will remain in the floor space that it has today. So there won't be any additional floor space allocated there. And we're -- a couple of our brands were really excited about the product that they're bringing to market. And Nike, in particular, we’re really enthusiastic about between the apparel product and the footwear product that they're bringing to market and we've made a big bet there.

Lauren Hobart

And if I would -- I could just add that the brand that we are creating is actually meant to be wide-space in the store. I mean, it will be -- it's an occasion that we are not currently getting in the opening price point area and feel that we can drive new traffic and occasions into the store.

Camilo Lyon

That's great color. And my last question if I could. This is more of a philosophical question. You've talked a lot about changes you're making to the store, trying to make it more experiential and more productive and I very much appreciate that. My question is, last week there was department store competitor that reported its intent to expand its activewear section even more that it already has, while also announcing a producing partnership with Planet Fitness. So, I'm curious about your thoughts about those moves, and if you would entertain the idea of giving out some of your square footage for partnerships, for external partnerships that drive incremental traffic?

Ed Stack

Well, it depends on what the -- we look at opportunities all the time and what somebody else is going to do seems like that might be good for their business and we'll continue to do what we think is right for our business. And I can't express strongly enough how enthusiastic we are about our business and enthusiastic about the partnerships we have with a number of our key brands going forward. So we very much like the position we're in right now.

Camilo Lyon

Fantastic. Thanks so much. Good luck.

Ed Stack

Okay. Thank you.

Operator

The next question will be from Sam Poser of Susquehanna. Please go ahead.

Sam Poser

Good morning. Thank you for taking my questions. I've got three. One, in the quarter the merchandise margin was -- that was flat ex those other charges. But given the mix change, why wasn't the -- why didn't we see a better improvement in the merch margin there?

Lee Belitsky

Well, there -- we did have to get a little bit more promotional in the month of December as the weather warms up there to try to capture some of that business leading up to Christmas. So we had a pretty strong Black Friday and the weather got favorable in January, but did we floor a bit more promotional in December.

We also noted that the -- our merch margin absent some of the scorecard changes and everything was about even year-over-year. So we did get some -- there was some tailwind from the reduction of hunt, but I'd say a little bit more promotional leading to Christmas is the offset.

Sam Poser

Thank you. And then secondly, the inventory levels or the inventory decision bring to stuff in early, was any of that based on the potential change of tariffs when those decisions were made to move stuff up? Or was this all strategic as you talked about building up the depth in key items?

Ed Stack

It was -- not much of it was related to tariffs. It was really related to trying to get our southern stores set earlier and be ready for this spring season across the country. So it was all part of getting the strike points set relocating, we did our footwear deck also with better products for the enthusiast that we think we've missed in the past. So it was really very strategic about what our merchandising philosophy was going to be going forward.

Sam Poser

All right. So to follow-up and then one last thing. You mentioned making sure of in-stock and having more of these better-selling full price items. I mean given your inventory levels, doesn't that imply that there is a good amount of slower selling promotional items that you still need to reduce that amount? I guess, it might take a little bit time of but...

Ed Stack

No, we've basically cleaned that up in the fourth quarter Sam.

Sam Poser

Okay. And then, lastly, you talked about the store the staff at the store how you're training to improve the experience. What are you doing with your store staffing levels in that regard also to ensure, because people can -- to make sure that they're always people there to ask when you're in there when you're visiting?

Ed Stack

Yes, we're protecting those staffing levels, yes. We're not reducing staffing levels. Thanks.

Sam Poser

All right. Thank you so much.

Operator

The next question will be from Peter Benedict of Robert W. Baird. Please go ahead.

Peter Benedict

All right, guys. First question, just on the slide deck that you guys sent out. One of the strike points that you highlighted was YETI. Just trying to understand maybe where you stand with those sets today versus maybe where you will be 6 months, 9 months, 12 months from now? Is that all where you wanted, or are you going to continue to kind of build that out? That's my first question.

Ed Stack

We're pretty pleased with where we are with YETI. It's been a great brand for us. And if you take a look at that slide that we put out there, I'm not sure what else we could do, that's a pretty impressive presentation of YETI. I don't think anybody else has got that kind of presentation.

Peter Benedict

Is that -- how many stores is that in? Is that already fully – that’s face of my question, is that already in every store that it's going into?

Ed Stack

Well, it was -- that's what it looked like in the vast majority of the stores for holiday. Ex we didn't have the T-shirts in all of the stores for holiday. The T-shirts will be in all the stores. Some will have a double table, which we show there, some will have a single, but that's pretty much what you'll find in 90% of our stores going forward ex some have a single table versus a double table.

Peter Benedict

Got it, okay. That make sense. Secondly, on the marketing message, the Better Starts Here, can you help us understand what's most incremental I think when we think about 2019 versus 2018 in terms of marketing as you guys try to invite more folks into the store to kind of see some of the changes? What should we be thinking about?

Lauren Hobart

In terms of the media types, we are pushing significantly toward digital and to our direct channel. So things like direct mail, e-mail things that we can leverage our datasets. But the digital channels have become the vast majority of our marketing spend. And the Better Starts Here campaign is launched in digital trying to reach the enthusiast athlete as well as the parent but also in TV and radio where we're also finding effective marketing mix.

Peter Benedict

Okay. And my last question is, just as you think about the comp plans for the year coming up, if we think about the higher end around 2%. Would that assume kind of a flattish in-store comp? I mean I know you guys are thinking about it more holistically, but it seems that the guidance certainly assumes that the trajectory where it leads the clients and the store comps are going to moderate as we move forward. So just trying to get a sense for maybe how much moderation you guys think you can achieve if everything goes as planned?

Lee Belitsky

Yes, it would still be kind of down slightly in the stores.

Ed Stack

But moderating…

Lee Belitsky

Yes, much better than this year.

Ed Stack

Moderating significantly.

Peter Benedict

Understood. All right. Make sense. Thank you.

Ed Stack

Thanks.

Operator

The next question will be from Joe Feldman of Telsey Advisory. Please go ahead.

Joe Feldman

Yes. Hi. Good morning, guys. Thanks for taking the question. I wanted to ask with regards to the hunting industry, how are you guys thinking about that industry growth? I know you're talking about growing in line with industry, but is that flattish? Is it still down for 2019?

Ed Stack

We would expect that continue to be down.

Lauren Hobart

Yes, down.

Lee Belitsky

Yes, continue to be down and we expect it to continue to be down.

Joe Feldman

Got it. And then sort of related to that, with regard to the Field & Stream stores themselves, can you just talk a little maybe how well those have been performing, presumably about that industry? And what your thoughts are more of at a higher level as to what to do with those stores?

Ed Stack

Well, we talked about this. We're not sure exactly what we're going to do with it. We're going to let it play out for a little while longer as we anniversary our announcement and then make a decision as what we're going to do with Field & Stream. We're not opening any new Field & Stream stores though. And right now, on a four-wall basis, they're cash flow positive and they're not a drain on the company.

Joe Feldman

Got it. That's good. And then real quick on the space allocation, just one more question there, how disruptive is that to the store when you do it? Like does it take a week? Does it take a few days? And like should -- I know you guys said it would be mostly a second quarter, does that have more of an impact then on the comp in the second quarter relative to the others, or I know you said you expect positive, so just trying to blend it all together.

Ed Stack

I mean it's somewhat disruptive but we're pretty good at this. We've been -- our construction team and store team work really well together and they have a plan. And it will take a few weeks to get each one of them done and then we've got inventory back in there. So it will take a little bit of time but the overall comps that we expect to have in the year, we don't think it's going to have a meaningful difference as we go through this transition.

Joe Feldman

That’s great. Thanks, guys. Good luck this quarter.

Ed Stack

Thanks.

Operator

The next question will be from Omar Saad of Evercore ISI. Please go ahead.

Omar Saad

Hey, thanks for taking my question. Most of them -- most of my question have been answered. But I wanted to kind of ask from the bigger picture level. Hearing you guys talk about the investments you're making in the store experience, technology investments, coupled with the fact that I think you're only planning to open less than 10 stores this year. Is it fair to say that the kind of direction of the company is really focused on maximizing the productivity of its existing store network, amplifying it with digital and eCommerce less so than the square footage path in the past, or is that really just more of a temporary hold on new store openings as you wait for rents to come down other kind of real-estate opportunities to crop up? I'm just trying to frame the bigger picture here, is there a change in tone? Thanks.

Ed Stack

We think that our biggest opportunity going forward is to maximize the boxes that we have both from a sales standpoint, margin productivity. So we think that's where the biggest piece comes from. We still think that there is opportunity to continue to open stores, but we also think that rents are going to continue to come down. We've got --depending on what happens with the Sears now, with Penneys, with a number of other retailers that are probably going to continue to close stores, we're in a pretty good position to take a fair amount of space that landlords need. Somebody would take a fair amount of space and so we're just being very patient and very selective in our real-estate process.

Omar Saad

Understood. And is it fair to say, add that kind of the discussion around investing in store experience, technology investment that there is even a greater emphasis on this call today than there has been in the past? Is there something that has change there and really crystallizing in the management team's mind? Thanks.

A – Lauren Hobart

Yes. I would say that, our stores, we think of them as one of the greatest assets, if not the greatest asset that we have and trying to optimize the omnichannel experience in the stores is top-top of mind. So we are extremely focused on the experience that athletes will have when they come to the store, the service that our teammates provide to athletes when they come to the store and making it just the hub of a big omnichannel wheel. So you are noticing we are very, very focused on the store experience.

Q – Omar Saad

That’s helpful. Thank you. Good luck

A – Ed Stack

Thanks.

Operator

The next question will be from Scot Ciccarelli of RBC Capital Markets. Please go ahead.

Q – Scot Ciccarelli

Good morning guys. So for your comp guidance for 2019, is the assumption that -- I know Peter asked the question similar to this, but is the assumption that traffic can get back to flat or turn positive as you may call these merchandise changes? Or do you expect think it will still be the primary driver of the year-over-year improvement?

A – Ed Stack

I don't think we're to make a -- we're not going to provide guidance to traffic and ticket right now. We're confident that the -- we hope that traffic will be better. We think that the comps in the stores will moderate which will imply better traffic. We do think that we can increase our UPTs and we can continue to increase ticket. All of that combined, we feel we'll -- over the year comps will be flat to plus 2%.

Q – Scot Ciccarelli

Okay, got it. And then just a clarification if you would, when you guys talk about the three-points of a comp drag from hunt and electronics, is that guns and ammo only on the hunt site? Or you're including other outdoor products that may have had let's call it a peripheral effect from the removal of those products?

A – Ed Stack

Well, it would be hunt, which would include anything that has to do with hunting. It doesn't include fishing and other outdoor categories, it's specifically hunt. So included in that would be obviously guns, ammunition, accessories associated with firearms, hunting apparel, anything associated with hunting. It would not include kayaks and other outdoor activities like that.

Q – Scot Ciccarelli

Roger that. Okay, thanks guys.

Operator

The next question will be from Jim Duffy of Stifel. Please go ahead.

Q – Peter McGoldrick

Hi, this is Peter McGoldrick on for Jim. Thanks for taking my questions. First, I'd just like to ask about technology talent investments. What are the key needs of the business? And can you talk about your expectations for organizational improvement from these changes?

A – Lauren Hobart

We have actually transformed our technology group into a very agile organization that is focused on product teams that are enhancing the experience across almost every aspect of how we do business. So that's everything from the website and the athlete experience to even productivity of everybody in our support center as well as in our stores. So it's a change in approach to how we actually implement technology, becoming an enormous strategic weapon for us and they are focused on absolutely every aspect of our internal and external experience.

Q – Peter McGoldrick

Thanks. And then I wanted to focus on the improvement on in-stocks and efforts to -- as it remains in stock. Was there any amount of lost sales that you were able to measure in 2018? Or was there a partial recapture in eCommerce business attributable to in-store out of stocks?

A – Ed Stack

Well I'm going to try to take that question in two different chunks. So yes, did we measure lost sales from an in-stock standpoint? Yes, we've got up at a pretty good idea of what that is. We're investing in key items to be able to do that. One of the things we're taking a look at -- our -- some of it was shipping challenges from -- some of it was shipping challenges, some of it was, we just didn't buy enough. I mean the least product going into the holiday season, we were very under invested in which is a very key item going into those last few days of holiday. We're going to make sure that that doesn't happen. We're going to be in-stock in key items in holiday that we feel comfortable going forward with.

Some of those items will be Nike fleece, Nike tights, CALIA product, golf apparel in our Southern stores we'll set earlier where we felt we missed quite a bit of sales. So we've really made a very big change from our merchandising and buying our stores from in-stock standpoint and an assortment standpoint going forward. And we're confident in what we've been able to do. The Yeti piece that we put in the presentation of that strike point, I mean we had a very good Yeti fourth quarter. And that's because we were in-stock in those products very similar to the presentation we put in the -- out with this release.

A – Lauren Hobart

On the second part of your question, we do not look at the outer stocks something that was a key to our driving of our eCommerce business if that's what you're getting at. We actually think that the outer stock issue affected both channels and will be an improvement across the board.

Q – Peter McGoldrick

Okay. Thank you for taking my questions.

A – Ed Stack

Thanks.

Operator

The next question will be from Tom Nikic of Wells Fargo. Please go ahead.

Q – Tom Nikic

Hey, good morning, everyone. Thanks for taking my question. Most of my questions have been answered already, but just a quick clarification on the investments. So it's $60 million of investments, partially offset by $30 million of cost savings which yields a net $30 million headwind for the year, am I -- I'm thinking about that correctly, right?

Lee Belitsky

That's correct.

Q – Tom Nikic

All right. That’s all I had. Best of luck this year.

Lee Belitsky

Thank you.

Lauren Hobart

Thank you.

Operator

The next question will be from John Kernan of Cowen. Please go ahead.

John Kernan

All right. Good morning, everybody. Thanks for taking my question. Can you talk about fulfillment cost and the change there the direction it's heading in? I know you made a lot -- you're making a lot of investments in new fulfillment centers. I think the one in New York is going to be fully automated. Can you just talk about the direction of fulfillment cost? And how that's going to affect your eComm profitability as we move throughout this year and into next?

Lee Belitsky

Yeah, the overall profitably once we get past the startup stage of those facilities will be favorable with a combination of the fulfillment and the delivery cost will be a little bit lower coming out of the centralized fulfillment centers than they will be if we do it in stores. We'll also be able to do a better job of keeping our items together on an order, which saves us as well. And we believe the quality of the shipments going out to the customers will be improved as well. So, there are multiple reasons to do it.

John Kernan

Got it. And then just one follow-up on athletic apparel. It felt like the category is much more full priced this holiday season versus prior seasons. Can you just talk about where you are from an AUR perspective overall in that business? Is there additional AUR recovery as you get back to a higher level of full price selling within that core athletic apparel category?

Ed Stack

We expect our AUR to be higher.

John Kernan

And just any detail on how much more recovery there is given that you are lapping several seasons of pretty high promotions?

Ed Stack

Yeah, I don't want to get to -- to guide to that but we do expect our AURs to be higher driven by hopefully less promotion, we will see if that continues, but also differentiated product that we're bringing in for more of the enthusiast athlete which we think we missed last year.

John Kernan

Got it. Thank you.

Operator

And the final question this morning will be from Chris Svezia of Wedbush. Please go ahead.

Chris Svezia

Good morning everyone and thanks for getting me in here. I guess first just on the SG&A investments. I guess we all love to talk about this, but just on the SG&A just unclear this. Where -- as you move forward, what is the leverage point on SG&A? I think it's been low single digit comp. Is that still the viewpoint? And is that possible to get leverage this year, or just given the magnitude of investments that that's unlikely?

Lee Belitsky

The guidance that we've got right now suggests that we will not leverage SG&A and I think it's just -- it's due to the volume of the investments that we've got for this year.

Chris Svezia

And what is a -- okay, if you were to take those out I guess to a degree what is -- what do you think that go-forward comp would allow you to leverage a business on SG&A?

Lee Belitsky

Yeah, I don't think I'd want to guide to that at this point.

Chris Svezia

Okay. Switching gears, just on the -- on DC and the automation and the two facilities that are opening up, are you embedding any benefit comp or anything along those lines once these facilities -- getting product to people faster, just any incremental benefit you're assuming in the comp or no?

Lee Belitsky

There is no implicit comp benefit resulting from adding these buildings.

Chris Svezia

Okay. And then, lastly, just on -- I know you've spoken a lot -- about a lot of brands talk about a lot private label. I'm just curious Adi, you've grown significantly in 2018 in terms of in the stores, product availability, apparel footwear I know Reebok comes out of it, but that's a different situation. I'm just curious how you think about that brand for 2019 and kind of going forward?

Ed Stack

We continue to be enthusiastic about that brand. We are very enthusiastic about the Nike brand and we think that the Under Armour is -- Under Armour will turnaround in our stores. So, the whole athletic category we are very enthusiastic about.

Chris Svezia

Okay. Thank you and all the best.

Lee Belitsky

Thank you.

Ed Stack

Thank you.

Operator

And ladies and gentlemen, this will conclude our question-and-answer session. I would like to hand the conference back over to Ed Stack for his closing remarks.

Ed Stack

I'd like to thank everyone for joining us on our fourth quarter call and look forward to talking to you as we report our first quarter results. Thank you.

Operator

Thank you, sir. Ladies and gentlemen, the conference has concluded. Thank you for attending today's presentation. You may now disconnect your lines.